Mammals and birds seek a warm environment prior to sleep, which triggers vasodilatation and body cooling. Ambient temperatures outside the thermoneutral zone suppress sleep, particularly rapid eye movement (REM) sleep. We discuss the neurocircuit interactions associated with thermal and sleep regulation that occur primarily in the hypothalamic areas. An increase in ambient temperature stimulates the median preoptic/medial preoptic area of the hypothalamus, decreases body temperature, and increases non-REM sleep. Similarly, optical stimulation of the ventrolateral preoptic nucleus, which contains galanin (VLPOGAL), results in body cooling and non-REM sleep. A decrease in VLPOGAL disrupts sleep in elderly individuals and may also be associated with reduced decline in core body temperature during sleep. However, stimulation of neurons that synthesize melanin-concentrating hormone in the lateral hypothalamus decreases body temperature and induces REM sleep. We also discussed the acute effect of light on sleep induction and decreased body temperature, implicated with gamma-aminobutyric acid-ergic neurons in the preoptic area. Further investigation is needed to determine the mechanisms that induce physiological responses in diurnal and nocturnal species. These studies will contribute to a better understanding of the association between sleep and thermoregulation.