This review addresses three principal questions about adenosine and sleep-wake regulation: (1) Is adenosine an endogenous sleep factor? (2) Are there specific brain regions/neuroanatomical targets and receptor subtypes through which adenosine mediates sleepiness? (3) What are the molecular mechanisms by which adenosine may mediate the long-term effects of sleep loss? Data suggest that adenosine is indeed an important endogenous, homeostatic sleep factor, likely mediating the sleepiness that follows prolonged wakefulness. The cholinergic basal forebrain is reviewed in detail as an essential area for mediating the sleep-inducing effects of adenosine by inhibition of wake-promoting neurons via the A1 receptor. The A2A receptor in the subarachnoid space below the rostral forebrain may play a role in the prostaglandin D2-mediated somnogenic effects of adenosine. Recent evidence indicates that a cascade of signal transduction induced by basal forebrain adenosine A1 receptor activation in cholinergic neurons leads to increased transcription of the A1 receptor; this may play a role in mediating the longer-term effects of sleep deprivation, often called sleep debt.