Background: Difficulty falling asleep (prolonged sleep latency) is a frequently reported problem in school-aged children. Aims: This study aimed to describe the distribution of sleep latency and factors that influence its duration. Methods: 871 children of European mothers were recruited at birth. 591 (67.9%) children took part in the follow-up at 7 years of age. Sleep and daytime activity were measured objectively by an actigraph worn for 24 h. Results: Complete sleep data were available for 519 children (87.8%) with a mean age of 7.3 years (SD 0.2). Median sleep latency was 26 minutes (interquartile range 13–42). Higher mean daytime activity counts were associated with a decrease in sleep latency (−1.2 minutes per 102 movement count per minute, p = 0.05). Time spent in sedentary activity was associated with an increase in sleep latency (3.1 minutes per hour of sedentary activity, p = 0.01). Conclusions: These findings emphasise the importance of physical activity for children, not only for fitness, cardiovascular health and weight control, but also for promoting good sleep.