The perifornical-lateral hypothalamic area (PF-LHA) has been implicated in the regulation of behavioural arousal. The PF-LHA contains several cell types including neurones expressing the peptides, hypocretin (HCRT; also called orexin) and melanin-concentrating hormone (MCH). Evidence suggests that most of the PF-LHA neurones, including HCRT neurones, are active during waking and quiescent during non-rapid eye movement (non-NREM) sleep. The PF-LHA contains local GABAergic interneurones and also receives GABAergic inputs from sleep-promoting regions in the preoptic area of the hypothalamus. We hypothesized that increased GABA-mediated inhibition within PF-LHA contributes to the suppression of neuronal activity during non-REM sleep. EEG and EMG activity of rats were monitored for 2 h during microdialytic delivery of artificial cerebrospinal fluid (aCSF) or bicuculline, a GABA A receptor antagonist, into the PF-LHA in spontaneously sleeping rats during the lights-on period. At the end of aCSF or bicuculline perfusion, rats were killed and c-Fos immunoreactivity (Fos-IR) in HCRT, MCH and other PF-LHA neurones was quantified. In response to bicuculline perfusion into the PF-LHA, rats exhibited a dose-dependent decrease in non-REM and REM sleep time and an increase in time awake. The number of HCRT, MCH and non-HCRT/non-MCH neurones exhibiting Fos-IR adjacent to the microdialysis probe also increased dose-dependently in response to bicuculline. However, significantly fewer MCH neurones exhibited Fos-IR in response to bicuculline as compared to HCRT and other PF-LHA neurones. These results support the hypothesis that PF-LHA neurones, including HCRT neurones, are subject to increased endogenous GABAergic inhibition during sleep. In contrast, MCH neurones appear to be subject to weaker GABAergic control during sleep.