Ten years ago the sleep disorder narcolepsy was linked to the neuropeptide hypocretin (HCRT), also known as orexin. This disorder is characterized by excessive day time sleepiness, inappropriate triggering of rapid-eye movement (REM) sleep and cataplexy, which is a sudden loss of muscle tone during waking. It is still not known how HCRT regulates REM sleep or muscle tone since HCRT neurons are localized only in the lateral hypothalamus while REM sleep and muscle atonia are generated from the brainstem. To identify a potential neuronal circuit, the neurotoxin hypocretin-2-saporin (HCRT2-SAP) was used to lesion neurons in the ventral lateral periaquaductal gray (vlPAG). The first experiment utilized hypocretin knock-out (HCRT-ko) mice with the expectation that deletion of both HCRT and its target neurons would exacerbate narcoleptic symptoms. Indeed, HCRT-ko mice (n = 8) given the neurotoxin HCRT2-SAP (16.5 ng/23nl/sec each side) in the vlPAG had levels of REM sleep and sleep fragmentation that were considerably higher compared to HCRT-ko given saline (+39%; n = 7) or wildtype mice (+177%; n = 9). However, cataplexy attacks did not increase, nor were levels of wake or non-REM sleep changed. Experiment 2 determined the effects in mice where HCRT was present but the downstream target neurons in the vlPAG were deleted by the neurotoxin. This experiment utilized an FVB-transgenic strain of mice where eGFP identifies GABA neurons. We verified this and also determined that eGFP neurons were immunopositive for the HCRT-2 receptor. vlPAG lesions in these mice increased REM sleep (+79% versus saline controls) and it was significantly correlated (r = 0.89) with loss of eGFP neurons. These results identify the vlPAG as one site that loses its inhibitory control over REM sleep, but does not cause cataplexy, as a result of hypocretin deficiency.