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Narcolepsy in which the hallucinatory component is unusually prominent may lead to the development of an illness indistinguishable from the schizophrenic syndrome. Psychotic symptoms dominate the symptomatology, so that the primary illness is obscured. Five patients are described for whom conventional antipsychotic drugs were ineffectual, but for whom treatment with stimulants produced substantial improvement. The diagnosis of narcolepsy was confirmed by Human Leukocyte Antigen typing and sleep laboratory testing. These results support the “REM intrusion” hypothesis of the causation of schizophrenia in as many as 7% of a series of schizophrenic patients. Implications for diagnosis and treatment are discussed.