做梦(zuò mèng) - to dream, to have a dream in Mandarin

做梦 (zuò mèng) is to dream in the literal sense, the thing that happens while you are asleep. Chinese treats the dream as an object you make rather than a state you enter, which is why the verb is 做.

Because it is a verb-object pair, anything you want to add goes in the middle, not on the end: 做了一个梦 (had a dream), 做过很多梦 (have had many dreams), 做了一个好梦 (had a good dream). Sticking 了 on the end of the whole word is the commonest beginner error here.

The second use is sarcastic. 你做梦 (you are dreaming) is the Chinese equivalent of dream on, and it is blunt. Keep it for friends. For the ambition sense of dream, English speakers usually want 梦想 (mèng xiǎng) instead, as in 我的梦想是当医生.