The state of sleep consists of different phases that proceed in successive, tightly regulated order through the night forming a physiological program, which for each individual is different but stabile from one night to another. Failure to accomplish this program results in feeling of unrefreshing sleep and tiredness in the morning. The program core is constructed by genetic factors but regulated by circadian rhythm and duration and intensity of day time brain activity. Many environmental factors modulate sleep, including stress, health status and ingestion of vigilance-affecting nutrients or medicines (e.g. caffeine). Acute sleep loss results in compromised cognitive performance, memory deficits, depressive mood and involuntary sleep episodes during the day. Moreover, prolonged sleep curtailment has many adverse health effects, as evidenced by both epidemiological and experimental studies. These effects include increased risk for depression, type II diabetes, obesity and cardiovascular diseases. In addition to voluntary restriction of sleep, shift work, irregular working hours, jet lag and stress are important factors that induce curtailed or bad quality sleep and/or insomnia. This review covers the current theories on the function of normal sleep and describes current knowledge on the physiologic effects of sleep loss. It provides insights into the basic mechanisms of the regulation of wakefulness and sleep creating a theoretical background for understanding different disturbances of sleep.