The lateral hypothalamus (LH) is a central hub that integrates inputs from, and sends outputs to, many other brain areas. Two groups of neurons in the LH, expressing hypocretin/orexin or melanin concentrating hormone (MCH), have been shown to participate in sleep regulation, energy homeostasis, drug addiction, motor regulation, stress response, and social behaviors. The elucidation of crosstalk between these two systems is essential to understand these behaviors and functions because there is evidence that there are reciprocal innervations between hypocretin/orexin and MCH neurons. In this study, we used MCH receptor-1 knock-out (MCHR1 KO) and wild-type (WT) mice expressing green fluorescent protein in hypocretin/orexin-containing neurons to examine the hypothesis that MCH modulates hypocretin/orexin-mediated effects on behavioral state and synaptic transmission in the LH. In MCHR1 KO mice, the efficacy of glutamatergic synapses on hypocretin/orexin neurons is potentiated and hypocretin-1-induced action potential firing is facilitated, potentially explaining an increased effect of modafinil observed in MCHR1 KO mice. In wild-type mice with intact MCHR1 signaling, MCH significantly attenuated the hypocretin-1-induced enhancement of spike frequency in hypocretin/orexin neurons. The MCH effect was dose dependent, pertussis toxin sensitive, and was abolished in MCHR1 KO mice. Consistent with this effect, MCH attenuated hypocretin-1-induced enhancement of the frequency of miniature EPSCs in hypocretin/orexin neurons. These data from MCHR1 KO and WT mice demonstrate a novel interaction between these two systems, implying that MCH may exert a unique inhibitory influence on hypocretin/orexin signaling as a way to fine-tune the output of the LH.