In the last three decades the two-process model of sleep regulation has served as a major conceptual framework in sleep research. It has been applied widely in studies on fatigue and performance and to dissect individual differences in sleep regulation. The model posits that a homeostatic process (Process S) interacts with a process controlled by the circadian pacemaker (Process C), with time-courses derived from physiological and behavioural variables. The model simulates successfully the timing and intensity of sleep in diverse experimental protocols. Electrophysiological recordings from the suprachiasmatic nuclei (SCN) suggest that S and C interact continuously. Oscillators outside the SCN that are linked to energy metabolism are evident in SCN-lesioned arrhythmic animals subjected to restricted feeding or methamphetamine administration, as well as in human subjects during internal desynchronization. In intact animals these peripheral oscillators may dissociate from the central pacemaker rhythm. A sleep/fast and wake/feed phase segregate antagonistic anabolic and catabolic metabolic processes in peripheral tissues. A deficiency of Process S was proposed to account for both depressive sleep disturbances and the antidepressant effect of sleep deprivation. The model supported the development of novel non-pharmacological treatment paradigms in psychiatry, based on manipulating circadian phase, sleep and light exposure. In conclusion, the model remains conceptually useful for promoting the integration of sleep and circadian rhythm research. Sleep appears to have not only a short-term, use-dependent function; it also serves to enforce rest and fasting, thereby supporting the optimization of metabolic processes at the appropriate phase of the 24-h cycle.