The deficiency of declarative memory compared with waking state is an often overlooked characteristic of sleep. Here, we investigated whether rhinal–hippocampal coherence, an electrophysiological correlate of declarative memory formation, is significantly altered during sleep as compared with waking state. For this purpose, we analysed recordings of intracranial EEG activity during sleep obtained directly from within the medial temporal lobe in patients with unilateral temporal lobe epilepsy. We found a general reduction of rhinal–hippocampal EEG coherence during sleep compared with waking state, which was most pronounced within the upper gamma bands (average decrease up to 56%). The observed coherence changes clearly differ from findings reported for surface EEG data and thus appear to be specific for the medial temporal lobe. The decrease of rhinal–hippocampal EEG coherence from waking state towards sleep may yield an electrophysiological explanation for the sleep-related deficiency of declarative memory.