Perceived sleep depth is a key determinant of subjective sleep quality, traditionally thought to reflect unconsciousness and reduced cortical activation. Here, we combined high-density EEG with a serial awakening paradigm during NREM sleep to examine its neural and experiential correlates. As expected, deeper sleep was associated with reduced cortical activation, reflected in a lower high-to-low frequency power ratio. Yet, this relationship weakened in the presence of dreaming, indicating that immersive conscious experiences can counteract the impact of cortical activation on perceived depth. Indeed, perceived sleep depth was lowest during states with a mere sense of presence and highest during immersive dreaming or deep unconsciousness. Across the night, physiological sleep pressure and subjective sleepiness declined, but perceived sleep depth rose alongside increasing dream immersiveness. These results challenge the view that deep sleep stems solely from reduced brain activity and suggest that immersive dreaming sustains perceived sleep depth as homeostatic pressure wanes.