This article compares and describes changes in sleep problems in 3- to 5-year-old Icelandic children referred and unreferred for sleep problems in infancy and explores changes in parents’ distress and the impact of children's sleep problems on families over time. The sample consisted of a clinical group (n = 31) that had been referred to a sleep-disorder clinic in infancy, and a comparative group (n = 150) of age-matched unreferred community children. Self-report scales assessed infant/child sleep pattern, the impact of the sleep problem on family life and parents’ distress. Results showed that about half the children in the community group have had a sleep problem in infancy. Nightwakings improved in both the referred and unreferred group over time but remained more frequent in the unreferred group. The referred group had significantly more settling problems in infancy than the other group but settling improved markedly over time. Parents of referred children were more fatigued compared with others despite improvement of children's sleep problems over time. Mothers of referred children were however, less likely to perceive the sleep problem as troublesome for family life than the others. It is concluded that parents of referred children are more fatigued than parents of unreferred children and nightwakings are more likely to persist in children who had sleep problems in infancy than in those with no such problems.