Narcolepsy is a common cause of chronic sleepiness distinguished by intrusions into wakefulness of physiological aspects of rapid eye movement sleep such as cataplexy and hallucinations. Recent advances provide compelling evidence that narcolepsy may be a neurodegenerative or autoimmune disorder resulting in a loss of hypothalamic neurons containing the neuropeptide orexin (also known as hypocretin). Because orexin promotes wakefulness and inhibits rapid eye movement sleep, its absence may permit inappropriate transitions between wakefulness and sleep. These discoveries have considerably improved our understanding of the neurobiology of sleep and should foster the development of rational treatments for a variety of sleep disorders.