The most famous of all Zhuangzi stories—"Zhuang Zhou Dreams of Being a Butterfly"—appears at the end of the second chapter, "On the Equality of Things".

昔者莊周夢為胡蝶，栩栩然胡蝶也，自喻適志與。不知周也。
Once, Zhuang Zhou dreamed he was a butterfly, a butterfly flitting and fluttering about, happy with himself and doing as he pleased. He didn't know that he was Zhuang Zhou.

俄然覺，則蘧蘧然周也。不知周之夢為胡蝶與，胡蝶之夢為周與。周與胡蝶，則必有分矣。此之謂物化。
Suddenly he woke up and there he was, solid and unmistakable Zhuang Zhou. But he didn't know if he was Zhuang Zhou who had dreamt he was a butterfly, or a butterfly dreaming that he was Zhuang Zhou. Between Zhuang Zhou and the butterfly there must be some distinction! This is called the Transformation of Things.
—Zhuangzi, chapter 2 (Watson translation)

The well-known image of Zhuangzi wondering if he was a man who dreamed of being a butterfly or a butterfly dreaming of being a man is so striking that whole dramas have been written on its theme. In it Zhuangzi "[plays] with the theme of transformation", illustrating that "the distinction between waking and dreaming is another false dichotomy. If [one] distinguishes them, how can [one] tell if [one] is now dreaming or awake?"