The present experiments in 10 healthy men compared auditory evoked potentials (AEPs) and heart rate (HR) indicators of stimulus processing during early and late phases of nocturnal stage 2 sleep. Definition of early and late sleep relied on endocrine pituitary-adrenal secretory activity which is known to be inhibited during early nocturnal sleep but sharply increases during late sleep. AEPs and HR responses were recorded to trains of 10 tone pips (1000 Hz; interstimulus interval 15 s; intertrain interval > 3 min). On one night, tone pips were presented in the first part of sleep, on the other night tone presentation took place in the second part, with the order of conditions balanced across subjects. Amplitudes of N150 and N550 components of the AEP, and of acceleratory and deceleratory HR responses, were higher during the first than second part of nocturnal sleep (P < 0.05). Moreover, habituation of P240 and N550 amplitudes was slower during the first than second part of sleep (P < 0.05). In supplementary experiments, AEP and HR responses to the same stimuli did not differ between the first and second part of the night when subjects were waking during stimulation. Results indicate a reduced inhibitory control over cortical stimulus processing during early nocturnal sleep. This diminished inhibition of cortical processing together with other concomitant changes during early sleep (such as the enhanced inhibition of pituitary-adrenal secretion) may reflect a coordinated regulatory function of sleep possibly mediated by hippocampal mechanisms.