Several findings support the activation hypothesis, positing that cortical arousal promotes dream recall (DR). However, most studies have been carried out on young participants, while the electrophysiological (EEG) correlates of DR in older people are still mostly unknown. We aimed to test the activation hypothesis on 20 elders, focusing on the Non-Rapid Eye Movement (NREM) sleep stage. All the subjects underwent polysomnography, and a dream report was collected upon their awakening from NREM sleep. Nine subjects were recallers (RECs) and 11 were non-RECs (NRECs). The delta and beta EEG activity of the last 5 min and the total NREM sleep was calculated by Fast Fourier Transform. Statistical comparisons (RECs vs. NRECs) revealed no differences in the last 5 min of sleep. Significant differences were found in the total NREM sleep: the RECs showed lower delta power over the parietal areas than the NRECs. Consistently, statistical comparisons on the activation index (delta/beta power) revealed that RECs showed a higher level of arousal in the fronto-temporal and parieto-occipital regions than NRECs. Both visual vividness and dream length are positively related to the level of activation. Overall, our results are consistent with the view that dreaming and the storage of oneiric contents depend on the level of arousal during sleep, highlighting a crucial role of the temporo-parietal-occipital zone.