The Dreamqueen is the daughter of Nightmare, the lord d the Dream Dimension and Zhilla Char, a demon succubus who attacked men in their dreams eight hundred years ago. Once, when wandering through the borders of Nightmare's domain, Zhilla Char was captured by Nightmare, who impregnated her and exiled her to a pocket dimension. According to the nature of the kind of demon she was, Zhilla Char was consumed in flames as she went through the process of giving birth. When the flames died, the unclothed, adult form of the demoness that became known as the Dreamqueen remained in her place. Zhilla Char's kind of demon "becomes" her own child. Zhilla Char’s daughter, the Dreamqueen, possessed her mother's memories, just as Zhilla Char had retained those of her own mother.
Awakening in the pocket dimension of ethereal "sub-matter" to which Nightmare had exiled her mother, the Dreamqueen used her powers to reshape it into a world that suited her fantasies, even creating a rate of people to serve her. As time wore on, the Dreamqueen grew discontented by her confinement to the dimension she ruled.
Three hundred and fifty years ago, the now-extinct tribe of Native Americans called the Chickaqua was suffering from a severe drought. The tribe's shaman, Nanquato, cast forth his astral self in an attempt to contact the tribe's sky gods to beg them to end the drought. Nanquato's spirit wandered through the dimensions until he came to the realm of the Dreamqueen, whom he mistakenly believed to be one of his sky gods. Reveling in her first deception, the Dreamqueen gave Nanquato a magic totem to bring back to his world that she assured him would solve his problems.
Back on Earth Nanquato cast a spell using the totem to bring rain, but instead it caused his fellow tribesmen to believe that they saw demonic beings attacking them. The Dreamqueen intended to use the fears of the tribesmen to strengthen the psychic link by which she induced their hallucinations enough so that she could escape to Earth. But before she could travel to Earth, one of Nanquato's tribesmen realized that Nanquato was responsible for their torment, and put an end to it by slaying him. Nanquato and the totem were buried so that neither could be used by demons to cause harm.
Nightmare taunted the Dreamqueen for her failure. Having once experienced causing the fears of human beings, the Dreamqueen longed to do so again, and was frustrated and enraged at her continuing confinement to her own dimension. Causing suffering to beings she had herself created somehow was not satisfying to her.
Finally, in recent times, her servants brought to her the creature called Goblyn, which had somehow entered her dimension from another reality. Intrigued, the Dreamqueen kept Goblyn under observation until she finally discovered that Goblyn was the twin of a young Earth mutant named Laura Dean, who had the power to open portals to other dimensions. Dean had sent Goblyn to the Dreamqueen's realm, thinking Goblyn would be safe there. Laura referred to this otherdimensional world, which she also visited, as "Liveworld," which she innocently believed to be a paradise.
Dean and Goblyn joined Alpha Flight, a team of Canadian superhuman adventurers. When Alpha Flight came to the Dreamqueen's dimension through a series of misadventures, the Dreamqueen tried in vain to compel them to help her escape it. Finally, Alpha Flight escaped back to Earth through an interdimensional portal. The Dreamqueen tried to follow them, but was prevented from escaping to Earth by the Alpha Flight member known as Puck, who seized her.
The Dreamqueen took Puck prisoner, restored his youth and tormented him, then caused the members of Alpha Flight to suffer nightmares based on their greatest fears, thereby creating psychic bonds between the Alpha Flight members and herself strengthened by the Alpha Flight members' fears. Realizing that archaeologist Elizabeth Twoyoungmen, a member of Alpha Flight known as Talisman, was near the cairn where Nanquato was buried, she induced in Twoyoungmen's dreaming mind the desire to touch the totem. The spirit of the goddess Snowbird, a former Alpha Flight member, warned Twoyoungmen of the Dreamqueen's intentions and Talisman instead used her own powers to destroy the totem.
But immediately afterward the Dreamqueen was able to use her psychic links with the other members of Alpha Flight to transport herself to Earth. Elizabeth Twoyoungmen was able to use her powers as Talisman to limit the degree to which the Dreamqueen could affect the minds of the other Alpha Flight members. The Dreamqueen, however, spread her influence throughout the Canadian city of Edmonton, causing its inhabitants to act out their darkest fantasies. If the Dreamqueen had not been stopped, her influence would have spread over the entire North American continent within a day.
Ultimately however, Elizabeth Twoyoungmen forced the Dreamqueen through an interdimensional portal opened by Laura Dean that apparently led to some kind of netherworld, thereby ending the Dreamqueen's control over her victims in Canada.