Neurons that release hypocretin/orexin modulate sleep, arousal, and energy homeostasis; the absence of hypocretin results in narcolepsy. Here we present data on the physiological characteristics of these cells, identified with GFP in transgenic mouse brain slices. Hypocretin-1 and -2 depolarized hypocretin neurons by 15mV and evoked an increase in spike frequency (+366% from a 1-3 Hz baseline). The mechanism for this appears to be hypocretin-mediated excitation of local glutamatergic neurons that regulate hypocretin neuron activity, in part by presynaptic facilitation of glutamate release. This represents a possible mechanism for orchestrating the output of the diffuse hypothalamic arousal system. No direct effect of hypocretin on membrane properties of hypocretin cells was detected. Norepinephrine and serotonin, transmitters of other arousal systems, decreased spike frequency and evoked outward currents, whereas acetylcholine and histamine had little effect.