The neurochemical underpinnings of sleep’s contribution to the establishment and maintenance of memory traces are largely unexplored. Considering that intranasal insulin administration to the CNS improves memory functions in healthy and memory-impaired humans, we tested whether brain insulin signaling and sleep interact to enhance memory consolidation in healthy participants. We investigated the effect of intranasal insulin on sleep-associated neurophysiological and neuroendocrine parameters and memory consolidation in 16 men and 16 women (aged 18–30 yrs), who learned a declarative word-pair task and a procedural finger sequence tapping task in the evening before intranasal insulin (160 IU) or placebo administration and eight hours of nocturnal sleep. On the subsequent evening, they learned interfering word-pairs and a new finger sequence before retrieving the original memories. Insulin increased growth hormone concentrations in the first night-half and EEG delta power during the second 90 min of NonREM sleep. Insulin treatment impaired the acquisition of new contents in both the declarative and procedural memory systems on the next day, whereas retrieval of original memories was unchanged. Results indicate that sleep-associated memory consolidation is not a primary mediator of insulin’s acute memory-improving effect, but that the peptide acts on mechanisms that diminish the subsequent encoding of novel information. Thus, by inhibiting processes of active forgetting during sleep, central nervous insulin might reduce the interfering influence of encoding new information.