Psychiatric disorders and sleep are related in important ways. In contrast to the longstanding view of this relationship which viewed sleep problems as symptoms of psychiatric disorders, there is growing experimental evidence that the relationship between psychiatric disorders and sleep is complex and includes bi-directional causation. In this article we provide the evidence that supports this point of view, reviewing the data on the sleep disturbances seen in patients with psychiatric disorders but also reviewing the data on the impact of sleep disturbances on psychiatric conditions. Although much has been learned about the psychiatric disorders-sleep relationship, additional research is needed to better understand these relationships. This work promises to improve our ability to understand both of these phenomena and to allow us to better treat the many patients with sleep disorders and with psychiatric disorders.