Sleep is an essential biological need of all animals studied to date. The sleep disorder narcolepsy is characterized by excessive daytime sleepiness, fragmentation of nighttime sleep, and cataplexy. Narcolepsy is caused by selective degeneration of hypothalamic hypocretin/orexin (HCRT) neurons. In mammals, HCRT neurons primarily regulate the sleep/wake cycle, feeding, reward-seeking, and addiction. The role of HCRT neurons in zebrafish is implicated in both sleep and wake regulation. We established a transgenic zebrafish model enabling inducible ablation of HCRT neurons and used these animals to understand the function of HCRT neurons and narcolepsy. Loss of HCRT neurons increased the expression of the HCRT receptor (hcrtr). Behavioral assays revealed that HCRT neuron-ablated larvae had normal locomotor activity, but demonstrated an increase in sleep time during the day and an increased number of sleep/wake transitions during both day and night. Mild sleep disturbance reduced sleep and increased c-fos expression in HCRT neuron-ablated larvae. Furthermore, ablation of HCRT neurons altered the behavioral response to external stimuli. Exposure to light during the night decreased locomotor activity of wild-type siblings, but induced an opposite response in HCRT neuron-ablated larvae. Sound stimulus during the day reduced the locomotor activity of wild-type sibling larvae, while HCRT neuron-ablated larvae demonstrated a hyposensitive response. This study establishes zebrafish as a model for narcolepsy, and indicating a role of HCRT neurons in regulation of sleep/wake transitions during both day and night. Our results further suggest a key role of HCRT neurons in mediating behavioral state transitions in response to external stimuli.