We combined fMRI and EEG recording to study the neurophysiological responses associated with auditory stimulation across the sleep-wake cycle. We found that presentation of auditory stimuli produces bilateral activation in auditory cortex, thalamus, and caudate during both wakefulness and nonrapid eye movement (NREM) sleep. However, the left parietal and, bilaterally, the prefrontal and cingulate cortices and the thalamus were less activated during NREM sleep compared to wakefulness. These areas may play a role in the further processing of sensory information required to achieve conscious perception during wakefulness. Finally, during NREM sleep, the left amygdala and the left prefrontal cortex were more activated by stimuli having special affective significance than by neutral stimuli. These data suggests that the sleeping brain can process auditory stimuli and detect meaningful events.