Regulation of the sleep-waking cycle is complex, involving multiple neurological circuits and diverse endogenous molecules. Interplay among assorted neuroanatomical and neurochemical systems such as acetylcholine, dopamine, noradrenaline, serotonin, histamine, and hypocretin maintain the waking (W) state. The sleep-onset is governed by the interacting forces of the sleep drive, which steadily increases with duration of W, and circadian fluctuations. Sleep-promoting neurons located in the anterior hypothalamus release GABA and inhibit wake-promoting regions in the hypothalamus and brainstem and participate in the generation of slow wave sleep (SWS). During rapid eye movement (REM) sleep, brainstem regions typically inhibited during W and SWS become active. In this regard, ascending projections from cholinergic neurons in the brainstem activate the thalamus which in turn increases the firing of the neurons in the cortex. Finally, sleep-promoting substances that accumulate in the brain during natural or prolonged W implicate a further complexity in the mechanism of modulation of the sleep-wake cycle. This review provides a broad understanding of our present knowledge in the field of sleep research.