While the functions of sleep remain largely unknown, one exciting hypothesis is that sleep contributes importantly to processes of memory and brain plasticity. Over the last decade, a large body of work has provided substantive evidence supporting this role of sleep in what is becoming known as sleep-dependent memory processing. This review offers a summary of these data, focusing specifically on the role of sleep in (1) memory encoding, (2) memory consolidation (along with the brain basis of this process), and (3) neural plasticity. The clinical ramifications of such findings are also explored.