Shrinking dream meaning is explained below using 4 different sources. Each interpretation is shown with its source.

Interpretation 1 — Dr. Mıchael Lennox

In the world of symbols, smaller is representative of feeling less than or insignificant. Something that is shrinking and steadily losing size is being diminished in power. Consider what is shrinking in your dream, as that is what is losing its ability to influence you. This may be beneficial or harmful, depending on what is shrinking.

If a person is shrinking, then it is a personality trait that is either lessening or needs to be moderated downward.

If it is you that is shrinking, look for ways in which you need to hold back or where you may feel disempowered in your life.

Source: Complete Dictionary of Dreams Author: Dr. Mıchael Lennox

Interpretation 2 — Dream Explanations - Anonymous

If you dream of a problem shrinking, then you are rising above your challenges. If, you dream of shrinking in the face of an increasing problem, then this denotes a challenge with -esteem. Your dream is giving you the message that no one can make you feel small without your permission.

See Short.

Source: Strangest Dream Explanations Author: Dream Explanations - Anonymous

Interpretation 3 — Garuda

Vision: If something is shrinking: some personality traits are losing their influence over you, because you have changed your attitude. Sometimes this dream may suggest that you pay less attention to appearances; “shrink your need for them down to size.” See Small, Low.
Source: Dreamers Dictionary Author: Garuda

Interpretation 4 — Klaus Vollmar

A frequent symbol when the dreamer is feeling inferior. As in the story of Alice in Wonderland, shrinking means entering a new reality.

A suggestion to become smaller, more childlike.

Source: Little Giant Encyclopedia Author: Klaus Vollmar