Neurons containing melanin-concentrating hormone (MCH) are codistributed with neurons containing orexin (Orx or hypocretin) in the lateral hypothalamus, a peptide and region known to be critical for maintaining wakefulness. Evidence from knockout and c-Fos studies suggests, however, that the MCH neurons might play a different role than Orx neurons in regulating activity and sleep-wake states. To examine this possibility, neurons were recorded across natural sleep-wake states in head-fixed rats and labeled by using the juxtacellular technique for subsequent immunohistochemical identification. Neurons identified as MCH+ did not fire during wake (W); they fired selectively during sleep, occasionally during slow wave sleep (SWS) and maximally during paradoxical sleep (PS). As W-Off/Sleep-On, the MCH neurons discharged in a reciprocal manner to the W-On/Sleep-Off Orx neurons and could accordingly play a complementary role to Orx neurons in sleep-wake state regulation and contribute to the pathophysiology of certain sleep disorders, such as narcolepsy with cataplexy.