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This essay offers a new interpretation of the butterfly dream in the Zhuangzi, which has been the focus of vigorous inquiries and heated debates in recent years. The novelty of this attempt lies in identifying a line of reasoning in the “Qiwulun” chapter that embodies a deep puzzle about the nature of self and in unpacking how the butterfly dream passage at the end of that chapter addresses the puzzle in question. Such a reading is cast within a larger context of the Inner Chapters of the Zhuangzi, where death is a major theme. The idea of interpreting the butterfly dream in connection with the issue of death is not new. However, this idea has never been made sufficiently clear. An attempt will be made to provide a sensible and plausible reading of the butterfly dream that it is hoped will be relevant and beneficial to contemporary philosophy of self and death.