While dreaming is a universal psychological activity, the implicit theories of dreams – defined as the lay beliefs and cognitive schemas regarding the nature and function of dreaming – are embedded in local cultural epistemologies. This study employs a Grounded Theory approach to explore the implicit theories of dreams in Malabar, a historically and culturally distinct region in Northern Kerala, on the southwestern coast of India. The study’s data was acquired from semi-structured interviews with 13 participants; all of them, born and raised in Malabar. The data was then supplemented with secondary accounts from history, mythology, and religion. The findings reveal a dual-model typology consisting of (1) a Meaningful/Functional register and (2) a Physiological/Irrelevant register. These registers coexist within a Syncretic Complex Model – a cognitive framework where mythologies, religious beliefs, and modern scientific narratives intersect. This research suggests that such implicit theories function as a psychological strategy for navigating ambivalent modernity where traditional and scientific epistemologies coexist. The outcome of the study is relevant for cultural oneirology, psychotherapy, and cultural-psychological investigations into the culture and dreams of Malabar.