The current study used event-related potentials to examine a candidate process through which sleep difficulties affect attentional processing in toddlers. Fifteen toddlers participated in an auditory Oddball task while neurophysiological data were collected. Sleep deficits were assessed using actigraphs, and attention was examined with a sustained attention task. A P3-like component was elicited from the toddlers, and longer target P3 latencies were associated with poorer sustained attention and irregular sleep. Findings suggest that irregular sleep is associated with less efficient attentional processing as reflected by the P3 component, and that longer target P3 latencies are associated with poorer sustained attention.