During the first year of life, infants spend most of their time in the sleeping state. Assessment of sleep during infancy presents an opportunity to study the impact of sleep on the maturation of the central nervous system (CNS), overall functioning, and future cognitive, psychomotor, and temperament development. To assess what is currently known regarding sleep during infancy and its effects on cognitive, psychomotor, and temperament development, we assessed the relevant literature published over the last several decades. To provide a foundation for a more in-depth understanding of this literature, we preface this with an overview of brain maturation, sleep development, and various assessment tools of both sleep and development during this unique period. At present, we do not have sufficient data to conclude that a causal relationship exists between infant sleep and cognitive, psychomotor, and temperament development. Caution should be used in predicting outcomes, as the timing and subjectivity of evaluations may obviate accurate assessment. Collectively, studies assess a wide array of sleep measures, and findings from one developmental period cannot be generalized readily to other developmental periods. Future studies should follow patients longitudinally. Additionally, refinements of existing assessment tools would be useful. In view of the relatively high reported pediatric prevalence of cognitive and behavioral deficits that carry significant long-term costs to individuals and society, early screening of sleep-related issues may be a useful tool to guide targeted prevention and early intervention.