The differential diagnosis of narcolepsy versus schizophrenia is sometimes complicated by similar phenomenology, particularly when hallucinations predominate. REM sleep disturbances seem fundamental in the pathophysiology of narcolepsy, and REM sleep intrusions during periods of wakefulness are often associated with hallucinations also in healthy controls and in patients with other brain disorders including schizophrenia. This study used a semistructured interview to investigate different aspects of hallucinations (frequency, modality, content, and dependence on body posture) in 148 patients with narcolepsy, 21 patients with acute exacerbation of a schizophrenic disorder, and 128 healthy subjects. About 80% of patients with narcolepsy, 81% of schizophrenics, and 37% of healthy subjects reported lifetime occurrence of hallucinations (at least once). Auditory hallucinations were reported by 81% of schizophrenic patients (narcoleptics 45%, healthy controls 9%), whereas 83% of narcoleptic patients reported visual hallucinations (schizophrenics 29%, healthy controls 19%). Kinetic hallucinations were experienced by 71% of patients with narcolepsy and 53% of healthy controls in contrast to only 5% of schizophrenics. Accordingly, the content of hallucinations differed substantially between the groups. Most hallucinations in narcoleptics but not in schizophrenics, were sleep-related and dependent on body posture. Taken together, the qualitative aspects of hallucinations in narcolepsy and schizophrenia were so different that a common underlying mechanism of hallucinations in the two conditions is unlikely. Although the clinical separation of patients with narcolepsy and schizophrenia with predominant hallucinations is sometimes difficult, clinical features including the patient's illness history, and careful psychopathological assessments can help to avoid misdiagnoses and treatment failures.