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The Dream Machine is a dream-inducing mind control device created by the Mad Hatter and it is featured in the episode "Perchance to Dream" of Batman: The Animated Series.
It is a reel-to-reel tape recording machine attached with a graph maker machine on its left side, and its right side is a control panel that links a mind-control apparatus-like helmet.
He used it on Batman to make him believe that his parents were still alive, he was engaged to Selina Kyle and that he was no longer Batman. Mad Hatter told him that there was no way out of the dream world. However, Batman was able to find a way out and then handed Mad Hatter over to the police.
The Dream Machine itself was likely remaining confiscated in police custody or it was destroyed long after the Mad Hatter was arrested by the police.