Answer
In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
1- Dream catchers belong to the category of talismans and amulets, which existed and still exist in many pagan societies everywhere.
2- Islam came to replace such practices and rituals with the beliefs and practices based on the belief in the Oneness of God.
3- No doubt hanging dream catchers on the houses or wearing them amount to the pagan practices that Islam abolished – because of their associations with shirk or associating partners with Allah.
In responding to your question, Sheikh Ahmad Kutty, a senior lecturer and Islamic scholar at the Islamic Institute of Toronto, Ontario, Canada, states:
Dream catchers belong to the category of talismans and amulets, which existed and still exist in many pagan societies everywhere. Islam came to replace such practices and rituals with the beliefs and practices based on the belief in the Oneness of God.
Therefore, the Prophet (peace be upon him) said, “The talismans and amulets are forms of shirk.” (At-Tabarani)
Here is what I found about the meaning and purpose of Dream catcher as posted here:
“According to the Ojibwa story, a mystical and maternal “Spider Woman” served as the spiritual protector for the tribe, especially for young children, kids, and babies. As the Ojibwe people continued to grow and spread out across the land, The Spider Woman found it difficult to continue to protect and watch over all the members of the tribe as they migrated farther and farther away. This is why she created the first dream catcher. Following her example, mothers and grandmothers would recreate the maternal keepsake as a means of mystically protecting their children and families from afar.
Sometimes referred to as “Sacred Hoops,” Ojibwe dreamcatchers were traditionally used as talismans to protect sleeping people, usually children, from bad dreams and nightmares. Native Americans believe that the night air is filled with dreams, both good and bad. When hung above the bed in a place where the morning sunlight can hit it, the dream catcher attracts and catches all sorts of dreams and thoughts into its webs. Good dreams pass through and gently slide down the feathers to comfort the sleeper below. Bad dreams, however, are caught up in its protective net and destroyed, burned up in the light of day.”
In light of the above, no doubt hanging dream catchers on the houses or wearing them amount to the pagan practices that Islam abolished – because of their associations with shirk or associating partners with Allah.
Islam came to affirm tawhid (the Oneness of Allah). Tawhid means that Allah alone is the Creator, Sustainer, and Sovereign Lord of the universe and He alone is the controller of the affairs in the cosmos.
{If God touches you with affliction, no one can remove it except Him, and if He touches you with good, He has power over all things: He is the Sovereign Lord over his creatures, the All-Wise, the All-Aware.} (Al-An`am 6:17-18)
We are to affirm a minimum of seventeen times a day {It is You we worship; it is You we ask for help.} (Al-Fatihah 1:5)
Therefore, the belief in a mysterious power, male or female, holy or demonic contradicts the essence of faith in the Oneness of God, and therefore, cannot be condoned in Islam.
Tawhid, when believed and affirmed and internalized, becomes a path to liberation; it liberates us from superstitions and saves us from being enslaved from anything and everything that takes away our dignity and freedom as humans – the natural way God has created us.
God tells us that He has dignified humankind. By believing or surrendering to anything other than God, we degrade ourselves and become prey to those who claim control over us as false gods, who have power, as God alone has the ultimate ability to bring ultimate benefit or afflict us with harm; so we must turn to Him.
The Prophet (peace be upon him) therefore, advised us to turn to Him by reading the last three surahs and the Fatihah and the following supplication:
Bisillaahilladhee laa yadhurru ma’imihi shay’un fil al-ardhi walaa fi al-ssamaa’I wahuwa al-ssameeu’ al-aleem
(In the name of Allah; with His name nothing on the earth or the heaven can do any harm; He is the All-Hearing, the All-Knowing.)
One may, however, ask, ‘what if someone hangs it as a piece of jewelry or decoration? The answer is, according to the rule of jurisprudence, “That which leads to haram is haram.”
Since tawhid is the most pivotal pillar of Islam, we must seek to preserve it and should refrain from all practices that may diminish or dilute it.
I pray to Allah to bless us with true steadfastness in faith and practice.
Almighty Allah knows best.