Dream Factory is the second track on the first disc of Prince’s 20th album Crystal Ball (his fourth using the name ). The album is not clearly divided between Prince tracks and tracks, but the liner notes' discussion of this track say "Prince played all instruments", so it is credited to Prince in this entry.
While specific recording dates are not known, basic tracking took place in mid-December 1985, at Sunset Sound in Hollywood, California (during the same set of sessions that produced Anotherloverholenyohead and Eternity). Dream Factory was not considered for Prince’s next album Parade, however.
It was included as the second track (first vocal track) on a late April 1986 configuration of the aborted album Dream Factory. It was kept as the second track (first vocal track) on the 3 June 1986 configuration and again on the 18 July 1986 configuration. It is possible that it was preceded by an unlisted segue including a bit of Nevaeh Ni Ecalp A and Prince introducing the song on all three configurations, like it was on the 18 July 1986 configuration, but this is unknown.
When Prince decided not to proceed with the album after disbanding the Revolution, and concentrated instead on Camille and Crystal Ball (both of which were also aborted), he decided not to include this song, even though it did not contain input from the Revolution.
A handwritten tracklist for The Time’s Corporate World on which Prince and Morris Day worked on in Summer 1989 shows that the song was, at one point, also considered for that album. But it is not known if an actual recording with Morris Day’s vocals took place.
A small sample of the song can be heard playing in a club scene on DJ Gets Jumped, a segue from the Exodus album by the New Power Generation released in 1995, indicating that Prince had not entirely forgotten about the track before its inclusion on Crystal Ball in 1998.