The lateral hypothalamus (LH), where wake-active orexin (Orx)-containing neurons are located, has been considered a waking center. Yet, melanin-concentrating hormone (MCH)-containing neurons are codistributed therein with Orx neurons and, in contrast to them, are active during sleep, not waking. In the present study employing juxtacellular recording and labeling of neurons with Neurobiotin (Nb) in naturally sleeping–waking head-fixed rats, we identified another population of intermingled sleep-active cells, which do not contain MCH (or Orx), but utilize γ-aminobutyric acid (GABA) as a neurotransmitter. The ‘sleep-max’ active neurons represented 53% of Nb-labeled MCH-(and Orx) immunonegative (−) cells recorded in the LH. For identification of their neurotransmitter, Nb-labeled varicosities of the Nb-labeled/MCH− neurons were sought within sections adjacent to the Nb-labeled soma and immunostained for the vesicular transporter for GABA (VGAT) or for glutamate. A small proportion of sleep-max Nb+/MCH− neurons (19%) discharged maximally during slow-wave sleep (called ‘S-max’) in positive correlation with delta electroencephalogram activity, and from VGAT staining of Nb-labeled varicosities appeared to be GABAergic. The vast proportion of sleep-max Nb+/MCH− neurons (81%) discharged maximally during paradoxical sleep (PS, called ‘P-max’) in negative correlation with electromyogram amplitude, and from Nb-labeled varicosities also appeared to be predominantly GABAergic. Given their discharge profiles across the sleep–wake cycle, P-max together with S-max GABAergic neurons could thus serve to inhibit other neurons of the arousal systems, including local Orx neurons in the LH. They could accordingly dampen arousal with muscle tone and promote sleep, including PS with muscle atonia.