멜로딕 헤비 메틀계의 새로운 강자 드림 이블은 99년 프레드릭 노드스톰(Fredrik Nordstrom)과 구스 G.에 의해 처음으로 결성이 논의되었다. 노드스톰은 악명높은 프로듀서이자 스튜디오 프레드만의 소유주로 HammerFall, In Flames, Dimmu Borgir, Spiritual Beggars의 프로듀싱을 맡으면서 현재 유럽 최고의 파워메틀 프로듀서로 손꼽히는 사람이며 구스 G는 Mystic Prophecy & Firewind에서 활동한 그리스 출신의 젊고 실력있는 기타리스트다. 프레드릭은 자신의 멜로딕 메틀 작품들을 실현시킬 적당한 멤버들을 물색하면서 다른 밴드들의 프로듀싱에 참여해 몇년간의 시간을 보냈다. 그러다 그리스로 여행을 가던 중 처음으로 구스를 만나게 되었는데 즉시 구스의 뛰어난 기타 실력에 탄복했고 이들의 의기투합은 곧바로 팀 결성으로 이어지게 된다.
고텐부르그(Gothenburg)로 돌아온 뒤 프레드릭은 니클라스 이스펠트(Niklas Isfeldt)를 보컬로 영입한다. 니클라스는 해머폴의 처음 두번째 앨범의 레코딩 세션때 프레드릭이 눈여겨보았던 백업 보컬리스트로 그가 드림 이블의 완벽한 보컬이 되는 것은 시간 문제였다. 니클라스는 보컬로 결정된 뒤 자신의 오랜 지기인 피터 스탈포스(Peter Stalfors)를 베이스기타로 데려온다. 피터는 오랫동안 베이스기타를 연주하면서 역시 뛰어난 송라이팅 실력까지 갈고닦은 인물로 해머폴의 Glory To The Brave의 작곡에도 참여한 적이 있는 실력파였다.
보컬과 기타리스트, 키보디스트, 베이시스트까지 갖춰지자 이제 남은 건 드러머였다. 이 엄청난 라인업을 완성할 드러머는 도대체 누구로 결정될 것인가? King Diamond, Mercyful Fate, Memento Mori & Notre Dame에서 활동했던 고텐부르그 락계의 전설 스노위 쇼(Snowy Shaw) 밖에는 없었다.
라인업을 완성한 드림 이블은 2001년 레코딩 준비를 끝내 이듬해 대망의 데뷔앨범 DragonSlayer를 발표해, 많은 추종자들을 양산했다. 데뷔앨범으로 센세이션을 일으킨 이들은 2002년 Evilized로 전작을 뛰어넘는 완성도를 보여줬으나 전작에 크게 고무된 일부 팬들로부터는 '소포모어 증후군'이라는 둥의 혹평에 시달리기도 했다.
그러나 2004년에 발표한 The Book Of Heavy Metal은 그들 최고의 앨범으로 평가받기에 이른다.
2004년, 기타리스트 Gus G는 기존의 밴드 Firewind 에 더 많은 시간을 투자하기 하기위해 밴드를 떠나고 그 자리는 마크블랙에 의해 대체되었다.
니클라스와 피터 또한 2005년 잠시 밴드를 떠났으나(그 자리는 Jake E.Burg와 Tommy Larsson으로 대체) 레코딩과 라이브쇼가 시작되기전에 다시 복귀하였으며, 2006년이 시작되면서 드러머 Snowy Shaw 또한 밴드를 떠나고 몇 달 동안의 드러머 공백기가 흐른 후 드디어 현재의 드러머인 Pat Power를 영입하게 된다.
Producer Fredrik Nordstrom had the ambition of creating a power metal band of his own for a long time, but had difficulty finding anyone with musical ideals similar to his own. However, while on holiday in the Greek islands during the year of 1999, Nordstrom met the young guitarist Gus G. (from Firewind). The musicians got along quite well, despite an age difference of over a decade. Plans for a band commenced - Gus had already been planning to relocate to Gothenburg, and upon his arrival he looked up Fredrik at Studio Fredman to begin writing.
The first person asked to join the new band was Snowy Shaw (from King Diamond, Mercyful Fate and Notre Dame), but the drummer initially refused their invitation. He would later change his mind and agreed to play on the band's debut album in a session capacity.
Vocalist Niklas Isfeldt had done backing vocals for some of HammerFall's songs produced by Nordstrom, and since he was not involved in any major projects at the time, he agreed to take the position. He also brought along his longtime friend and Pure-X bandmate Peter Stalfors, who assumed bass duties.
Up until the moment the first promotional photos were shot, the entire band had never been in the same place at the same time before. Some members did not even know each other.
The band soon got a deal with Century Media Records, and intended to name themselves Dragonslayer due to the medieval and fantastical themes of the songs written by Gus and Nordstrom. The label did not find the name original enough, and thus the band settled for the name Dream Evil, inspired by the Dio album of the same name.
Dream Evil's debut album was released in April 2002, and received positive feedback from the metal press. At one point the album, titled Dragonslayer, reached number one on the Japanese import charts. The band proceeded to play a series of festivals, and also supported Blind Guardian during a part of their world tour.
The band members found that they got along well as a unit, despite the somewhat random manner by which they had been brought together - Snowy Shaw decided to join the band permanently, and Dream Evil went on their first Japanese tour. During their stay in Japan, the band was invited by HammerFall to support their 2003 European tour. Their label manager hinted that it would be a good idea to have a new album out by then.
With little time on their hands, the band wrote the basis of several songs on the flight back to Europe, and on the day of their arrival entered the studio in order to record a new album. They took two weeks in total to record Evilized, and most songs were recorded as they had been written. It was released on 20 January, and one week later Dream Evil proceeded to tour Europe with HammerFall and the less known Masterplan.
For their third album, the band actually took time to write the songs and fine-tune them in the studio. The Book of Heavy Metal took two months to be recorded, and was released in May 2004.
Guitarist Gus G. left the band in late 2004 in order to dedicate more time to Firewind, being replaced by Mark Black (then known as Mark U Black). Black had previously filled in for Gus on a few other occasions and replaced him permanently on their tour as support act for Saxon.
Niklas Isfeldt and Peter Stalfors briefly left in 2005 to be replaced by Jake E. Berg (aka Jake Steel, of Dreamland) and Tommy Larsson, but returned before recordings or live shows were done. At the start of 2006, Snowy Shaw abruptly quit Dream Evil. After a period of silence for several months, Dream Evil announced Pat Power (Patrik Jerksten), a co-worker of Fredrik Nordstrom from Studio Fredman, as Snowy's replacement.
The first album featuring the new line-up, United, was released on October 13, 2006.
Dream Evil announced on December 7, 2007 on the website that Mark Black would be leaving the band and will be replaced by Daniel Varghamne aka Dannee Demon.
On March 3, 2008, the band announced that they had begun work on a new studio album, tentatively titled In the Night. The album was released on January 25, 2010 in Europe and January 26, 2010 in North America.
On July 23, 2008, the band announced that their first live DVD/CD set, Gold Medal in Metal (Alive & Archive), was released on August 25, 2008. In an interview with bass player Peter Stalfors he talked about a new album for 2012.