Nightmares are intense and disturbing dreams that can significantly affect the well-being of those who suffer from them frequently. This systematic review examines the neurophysiological characteristics of disturbed sleep in individuals with frequent nightmares through studies using electroencephalography (EEG) and event-related potentials (ERPs). A total of 10 empirical studies were included that aligned with the inclusion criteria, and they analyzed cortical activity patterns in nightmare sufferers compared to healthy control groups. All studies utilized polysomnography (PSG) to strengthen sleep measurements. The results consistently showed increased cortical activity, particularly beta and low gamma EEG frequency across rapid eye movement (REM) sleep and non-rapid eye movement (NREM) sleep. The studies showed a significantly reduced slow-wave sleep through delta waves in nightmare sufferers, suggesting mental alertness even during deep sleep. While ERP data were limited, the findings show increased emotional reactivity and disrupted neural regulation during sleep in nightmare sufferers. Future research should study the ERPs of nightmares sufferers that might give more insight into emotional markers.