Sleep has been shown to impact on both physical and mental health, and sleep problems present a considerable burden for individuals and society. There appears to be a complex bidirectional relationship between sleep disturbance and psychiatric symptoms, each potentially influencing the other. In particular, sleep disorders have been associated with more severe symptoms and are predictive of relapse in those with psychotic disorders. This article discusses the relationship between psychosis and insomnia, sleep apnoea, nightmares, circadian rhythm abnormalities and the impact of medications on these relationships. We also discuss the clinical implications of the relationship between sleep disturbance and psychotic disorders along with potential targets for intervention.