Neural substrates of wakefulness, rapid eye movement sleep (REMS), and non-REMS (NREMS) in the mammalian hypothalamus overlap both anatomically and functionally with cellular networks that support physiological and behavioral homeostasis. Here, we review the roles of sleep neurons of the hypothalamus in the homeostatic control of thermoregulation or goal-oriented behaviors during wakefulness. We address how hypothalamic circuits involved in opposing behaviors such as core body temperature and sleep compute conflicting information and provide a coherent vigilance state. Finally, we highlight some of the key unresolved questions and challenges, and the promise of a more granular view of the cellular and molecular diversity underlying the integrative role of the hypothalamus in physiological and behavioral homeostasis.