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The phrase "American dream" can be used in a variety of contexts. King is clearly using it to mean racial equality. He is saying that a country and society without discrimination or prejudice would fulfill the American dream.
King does not actually say "the American dream is..." Instead, he says
... I still have a dream. It is a dream deeply rooted in the American dream.
He then goes on to tell what his dream is. It is his famous dream of a country in which there is racial harmony and equality. It is a country where people are not
judged by the color of their skin but by the content of their character.
King's dream is a dream of racial harmony. Since he says that it is rooted in the American dream, we can infer that the American dream is also one of harmony and equality.
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