This article reviews the evidence that melatonin, a hormone produced by the pineal gland during the dark hours, plays a major role in the regulation of the sleep-wake cycle. In recent years, our laboratory has been involved in a large-scale project aimed at investigating the role of endogenous melatonin in sleep-wake regulation and the effects of nonpharmacological levels of melatonin on sleep. Based on our finding on the precise coupling between the endogenous nocturnal increase in melatonin secretion and the opening of the nocturnal sleep gate, we propose that the role of melatonin in the induction of sleep does not involve the active induction of sleep, but is rather mediated by an inhibition of a wakefulness-producing mechanism in the central nervous system. Our studies also suggest that exogenously administered melatonin may be beneficial in certain types of insomnia that are related to disturbances in the normal secretion of the hormone.