Many adolescents spend a significant amount of daily time playing video games. Although only a minority are problematic gamers, adolescents are still a group which could be vulnerable to the influence of video games. At the same time, gaming could be a positive force in their development. Several previous approaches were used in investigating the relationship between adolescent gaming and well-being and sleep, but they only explored a part of the picture. This study approached the issue from the perspective of the Self Determination Theory (SDT), which enabled a holistic study of both gaming motivation and the effects of gaming. It used the daily diary methodology and investigated within person relationships, which brings several advantages (e.g., reduced retrospective bias) and is unique in the field. The aim of this study was to examine the relations between basic psychological needs and gaming and between gaming and well-being and sleep. Two pilot studies were conducted first and then the main daily diary study was conducted on a sample of adolescent gamers (final N=125), who played video games every day (92% male, 4% female, 4% did not identify). The participants first filled in a baseline questionnaire and then filled in daily morning and evening questionnaires for eight consecutive days. The data were analysed by using Multilevel Structural Equation Modelling (MSEM). Results showed that the daily experienced real-life basic psychological need satisfaction and frustration was crucial in predicting the daily well-being of adolescent gamers. In-game need satisfaction contributed to their daily vitality, i.e., the feeling of energy and aliveness, and it contributed to the daily positive consequences of video games. On days when they felt real-life need frustration, the gamers actually played less video games. Once need based experiences were considered, gaming time did not contribute to neither well-being nor sleep, only gaming after midnight was weakly related to sleep quality. These results imply that real-life need-based experiences of adolescent gamers are crucial for their well-being, but they can also benefit from in-game need satisfaction. In other words, if they have positive need experiences in their life outside gaming, gaming could be an additional positive force in lives of many adolescent gamers.