Neurons containing the neuropeptide orexin (hypocretin) are located exclusively in the lateral hypothalamus and send axons to numerous regions throughout the central nervous system, including the major nuclei implicated in sleep regulation. Here, we report that, by behavioral and electroencephalographic criteria, orexin knockout mice exhibit a phenotype strikingly similar to human narcolepsy patients, as well as canarc-1 mutant dogs, the only known monogenic model of narcolepsy. Moreover, modafinil, an anti-narcoleptic drug with ill-defined mechanisms of action, activates orexin-containing neurons. We propose that orexin regulates sleep/wakefulness states, and that orexin knockout mice are a model of human narcolepsy, a disorder characterized primarily by rapid eye movement (REM) sleep dysregulation.