How the brain controls vigilance state transitions remains to be fully understood. The discovery of hypocretins, also known as orexins, and their link to narcolepsy has undoubtedly allowed us to advance our knowledge on key mechanisms controlling the boundaries and transitions between sleep and wakefulness. Lack of function of hypocretin neurons (a relatively simple and non-redundant neuronal system) results in inappropriate control of sleep states without affecting the total amount of sleep or homeostatic mechanisms. Anatomical and functional evidence shows that the hypothalamic neurons that produce hypocretins/orexins project widely throughout the entire brain and interact with major neuromodulator systems in order to regulate physiological processes underlying wakefulness, attention, and emotions. Here, we review the role of hypocretins/orexins in arousal state transitions, and discuss possible mechanisms by which such a relatively small population of neurons controls fundamental brain state dynamics.