Insomnia is a prevalent disorder, altering night time sleep, daytime mood and performance. Current treatment strategies, used separately or in combination, include pharmacological, circadian, behavioural and cognitive therapy. An increased diversity of available hypnotics with different potency, pharmacodynamic and pharmacokinetic profiles and improved side effect profiles provides more flexibility in designing individual treatment strategies. Melatonin, a pineal hormone with acute sleep-promoting and chronobiotic properties, allows additional possibilities in treating insomnia and circadian sleep disorders. Current studies of processes involved in normal sleep regulation and pathophysiology of insomnia should result in the development of new medications based on physiological mechanisms of sleep.