This review paper presents a brief historical survey of the technological and early research that laid the groundwork for recent advances in sleep-waking research. A major advance in this field occurred shortly after the end of World War II with the discovery of the ascending reticular activating system (ARAS) as the neural source in the brain stem of the waking state. Subsequent research showed that the brain stem activating system produced cortical arousal via two pathways: a dorsal route through the thalamus and a ventral route through the hypothalamus and basal forebrain. The nuclei, pathways, and neurotransmitters that comprise the multiple components of these arousal systems are described. Sleep is now recognized as being composed of two very different states: rapid eye movements (REMs) sleep and non-REM sleep. The major findings on the neural mechanisms that control these two sleep states are presented. This review ends with a discussion of two current views on the function of sleep: to maintain the integrity of the immune system and to enhance memory consolidation.