Abstract
In this article, I examine two conflicting readings of Zhuangzi's butterfly dream story in the second chapter of the book named after him: the internal transformation and the external transformation reading. I argue that the external interpretation is better supported by the theme of the second chapter and stories in the second chapter and other chapters. However, I argue, the internal transformation interpretation does not necessarily contradict the external transformation interpretation; rather, it reinforces the external transformation interpretation if we give a different reading to the content of the internal transformation interpretation.