Insomnia, disturbed sleep, and fatigue are among the most frequent health complaints of perimenopausal women. Estrogen replacement therapy (ERT) usually improves sleep, most likely by alleviating vasomotor symptoms. However, sleep difficulties are not restricted to the perimenopausal period. Older postmenopausal women typically experience longer latencies to sleep onset, increased nocturnal waking, increased fragmentation of sleep, and less slow wave (deep) sleep. These sleep changes in older women may be partially related to the postmenopausal profile of sex steroid hormones. Estrogen has powerful effects on several biological factors that directly influence sleep, including body temperature regulation, circadian rhythms, and stress reactivity. The link between sleep disturbance in older women and these CNS effects of estrogen is largely speculative at present. This article reviews what is known, what remains to be addressed, and some clinical implications.