Delineating the basic mechanisms that regulate sleep will likely result in the development of better treatments for sleep disorders. The hypothalamus is now recognized as a key center for sleep regulation, with hypothalamic neurotransmitter systems providing the framework for therapeutic advances. An increased awareness of the close interaction between sleep and homeostatic systems is also emerging. Progress has occurred in the understanding of narcolepsy--molecular techniques have identified the lateral hypothalamic hypocretin (orexin) neuropeptide system as key to the disorder. Other sleep disorders are now being tackled in the same way and are likely to yield to efforts combining basic and clinical research. Here we highlight the role of the hypothalamus in sleep physiology and discuss neurotransmitter systems, such as adenosine, dopamine, GABA, histamine and hypocretin, that may have therapeutic applications for sleep disorders.