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Description: How memory representations are shaped during and after their encoding is a central question in the study of human memory. Recognition responses to stimuli that are similar to those observed previously can hint at the fidelity of the memories or point to processes of generalization at the expense of precise memory representations. Experimental studies utilizing this approach showed that emotions and sleep both influence these responses. Sleep, and more specifically REM sleep is assumed to facilitate the generalization of emotional memories. We studied mnemonic discrimination by the emotional variant of the Mnemonic Separation Task (MST) in participants who spent a daytime nap between learning and testing compared to another group that spent an equivalent time awake between the two sessions. Our findings indicate that the discrimination of similar but previously not seen items from previously seen ones is enhanced in case of negative compared to neutral and positive stimuli. Moreover, whereas the sleep and the wake groups did not differ in memory performance, participants entering REM sleep exhibited increased generalization of emotional memories. The intensity of REM sleep as quantified by REM duration and REM density were associated with enhanced recognition of emotional items. Our findings indicate that REM sleep shapes emotional memories in a way that enhances recognition at the expense of detailed memory representations.