When you go to sleep at night, your body is in suspended animation until around 3 AM. Then, all of the organs start their preparation for getting up and going. They first start by cleaning themselves out and emptying their contents into the bladder. And no, it is not connected to DMT.
About the DMT. DMT is a banned substance; I think it is Dimethyltryptamine. It is the substance in Psilocybin Mushrooms; very powerful. Probably used by the Mayans and definitely by the Northwest natives in their Peyote rituals.
We do secrete in our bodies a precursor to the hormone Melatonin and Serotonin named 5-HTP which is 5-Hydroxytryptophan and the 5-HTP comes from mushrooms.
I think 5-HTP is maybe a cousin to DMT and not potent, but just right.
It will lead to more lucid dream states, the 5-HTP.
Forget about the DMT.

http://www.dreamviews.com
http://www.lucidity.com
"The Master of Lucid Dreams," Dr. Olga Kharitidi,
"The Masters and Their Retreats," Mark Prophet,
"Watch Your Dreams," Ann Ree Colton,
http://www.dreamhealer.com
http://www.easwaran.org
Natural and synthetic "drugs" are stimulants to certain types of brain activities. There are several reasons for caution: prolonged use of e.g. marijuana literally spaces neuroconnections, resulting in loss of normal transmission time across synapses; acute high releases of various neurotransmitters upon e.g. LSD ingestion unbalances perceptual functions, causing dream/nightmare type releases/impacts; the vast increase of e.g. DMT, which is produced in carefully-regulated amounts in the normal body biochemistry, bypasses psychological levels of development in ways the person is unprepared for--meditation and other moral/ethical training accomplishes far more enlightenment, and far less dangerously.
Am acquainted with a particular U.S. researcher, a medical doctor, who was granted a license to use DMT in controlled settings. He is in favor of some aspects of supervised usage. However, perhaps unknown to him, psychics note that any strong, out-of-alignment energy, whether rage, drugs, etc., tends to warp and even break the more delicate processes. After such usage, and before healing, these breaks in finer structures permit a greater susceptibility to astral "leeches" or "entities."
So, the real problem with DMT is the same with any strong drug: it's too unbalancing, and people interested in self-realization ought develop their morality and ethics, and personal insight, via labor-intensive processes. It's similar to handing powerful weapons to a backward tribe and expecting them to use them with ethics and morality--particularly if the tribe is stressed by unusual circumstances (drugs, anger, etc.). This analogy about moral development and technology was given by General MacArthur, I believe, regarding atomic weapons. He said we had 20th century technology but hadn't developed beyond cave person ethics.

i have faced the same thing like you do...and i usually wake arnd 230ish each night
Ive heard of many ppl waking at exactly 3 am
Its somethng to do wth sleep patterns or so i guess
sending you a few links

Gregg k:
I just glanced through your post and noticed an inaccuricy in your information
DMT is not the hallucinagenic contained in Psilocybin mushrooms, Psilocybin is. DMT is something completely different.

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its all me me me me me...

When i experience lucid dreams , i dont bother about what causing it or how to induce it further .
There is aways an inner desire that participate in causing it..
I dont think theres any point analysing what causes dreams or sleep... may be everything else is caused by a dream, even our very desire to analyse.
Once we gain control on our dream activities... our goal is to materialise it .... and then realise firmly of our interdimensional existence

PS - DMT is found in Ayahuasca, and usually comes from Psychotria viridis. It is however, structurally similar to serotonin, psilocin, and a couple other psychedelics, but do not confuse that fact with any relation in how it affects perception.

As for the question of whether DMT is produced in the body, please read this: http://www.erowid.org/ask/ask.php?ID=3146
The consensus seems to be "yes", but whether or not it is produced in the pineal gland, or by all people? The jury is still out.