The lateral preoptic (LPO) hypothalamus is a center for NREM and REM sleep induction and NREM sleep homeostasis. Although LPO is needed for NREM sleep, we found that calcium signals were, surprisingly, highest in REM sleep. Furthermore, and equally surprising, NMDA receptors in LPO were the main drivers of excitation. Deleting the NMDA receptor GluN1 subunit from LPO abolished calcium signals in all cells and produced insomnia. Mice of both sexes had highly fragmented NREM sleep-wake patterns and could not generate conventionally classified REM sleep. The sleep phenotype produced by deleting NMDA receptors depended on where in the hypothalamus the receptors were deleted. Deleting receptors from the anterior hypothalamic area (AHA) did not influence sleep-wake states. The sleep fragmentation originated from NMDA receptors on GABA neurons in LPO. Sleep fragmentation could be transiently overcome with sleeping medication (zolpidem) or sedatives (dexmedetomidine; Dex). By contrast, fragmentation persisted unde...