Introduction Dream enactment behavior is one of the features of rapid eye movement sleep behavior disorder. It might be a manifestation of neurodegenerative diseases and can lead to fall associated injuries. There is no evidence of dream enactment behavior and its associated factors in Ethiopia. Hence, this study targeted to pinpoint the predictors of dream enactment behavior among Medical students at the University of Gondar. Methods The cross-sectional survey was carried out at the University of Gondar among Medical students selected by simple random sampling technique from Dec 2020 to Feb 2021. We used a structured pretested questionnaire to collect the data and dream enactment behavior was evaluated using rapid eye movement sleep behavior disorder single question. Descriptive statistics were computed, and determinant factors were identified using binary logistic regression model. In the final model, explanatory variables with a p<0.05 were considered as predictors (statistically significant) of the dream enactment behavior. The strength of association was determined using adjusted odds ratio (AOR) with its 95% CI. Results Four-hundred and twelve students took part in the study with 97.4% response rate. The mean age of participants was 20.82(±1.88) years and 291(70.63%) were males. The prevalence of dream enactment was 34.47% (95% CI: 30.02–39.20). Daytime sleepiness score (AOR = 1.104; 95% CI: 1.053–1.160), age (AOR = 1.15; 95% CI: 1.019–1.290), monthly pocket money (AOR = 0.9991; 95% CI: 0.9985–0.9997), alcohol drink (AOR = 2.71; 95% CI: 1.076–6.846), and perceived stress (AOR = 3.854; 95% CI: 1.802–8.242) were statistically significant factors of dream enactment behavior. Conclusions In this study, the magnitude of dream enactment behavior was high which was significantly associated with daytime sleepiness score, age, monthly pocket money, alcohol drink, and perceived stress all of which are modifiable except age. The University of Gondar has to plan a strategy to avert the condition via the prevention of the determinant factors. Students need to reduce stress and avoid alcohol drink. We strongly urge forthcoming scholars to ascertain association of dream enactment and academic performance of university students.