A series of discoveries spanning the last decade have uncovered a new neurotransmitter - hypocretin - and its role in energy metabolism, arousal, and addiction. Also, notably, a lack of hypocretin function has been unequivocally associated with the sleep disorder narcolepsy. Here we review these findings and discuss how they will influence future treatments of narcolepsy and other arousal and hyperarousal disorders. We introduce the concept of the hypocretin peptides and receptors and discuss the neuroanatomy and neurophysiology of the hypocretin system. A gain of function through pharmacolological and optogenetic means is also addressed in the following text, as is the loss of function: specifically narcolepsy in dogs, mice and humans and the challenges currently faced in treatment.