The hypnogenic function of the rostral hypothalamic region, particularly the preoptic area (POA) was established previously on the basis of lesion, neuronal unit recording, and neurochemical and thermal stimulation studies. Recent studies have mapped the locations of putative sleep-promoting neurons in the POA using c-Fos immunostaining techniques and confirmed these findings with electrophysiological methods. Segregated groups of sleep-active neurons have been localized in the ventrolateral POA (vlPOA) and median preoptic nucleus (MnPN). MnPN and vlPOA sleep-active neurons express the inhibitory transmitter, GABA. In vlPOA neurons, GABA is co-localized with a second inhibitory transmitter, galanin. Descending projections from these sites terminate in putative arousal-promoting cell groups, including histaminergic, serotonergic, orexinergic, noradrenergic, and cholinergic neurons. These findings suggest the hypothesis that non-REM sleep occurs as a consequence of GABAergic and galaninergic inhibition of arousal-promoting neurons resulting from activation of vlPOA and MnPN sleep-promoting neurons. In support of this hypothesis, it was shown that putative sleep-promoting and arousal-promoting neurons exhibit reciprocal changes in discharge across the sleep-wake cycle and that GABA release in wake-promoting sites increases during nonREM sleep. In addition, some POA sleep-active neurons are warm-sensitive. Local POA warming inhibits discharge of multiple arousal-promoting neuronal groups. POA warming, unit recording, and lesion studies also show that POA regulates the amount of delta EEG activity within nonREM sleep, and index of the depth of sleep. Finally, there is evidence that arousal systems inhibit vlPOA and MnPN neurons and the POA hypnogenic mechanism. Mutually-inhibitory interactions between sleep-promoting and arousal-promoting systems are hypothesized to form a functional sleep-wake switch.