Fear conditioning [inescapable shock training (ST)] and fearful context re-exposure (CR) alone can produce significant fear indicated by increased freezing and reductions in subsequent rapid eye movement (REM) sleep. Damage to or inactivation of the basolateral nucleus of the amygdala (BLA) prior to or after ST or prior to CR generally has been found to attenuate freezing in the shock training context. However, no one has examined the impact of BLA inactivation on fear-induced changes in sleep. Here, we used the GABAA agonist, muscimol (MUS), to inactivate BLA prior to ST, the period when fear is learned, and assessed sleep after ST and sleep and freezing after two CR sessions. Wistar rats (n = 14) were implanted with electrodes for recording sleep and with cannulae aimed bilaterally into BLA. After recovery, the animals were habituated to the injection procedure (handling) over 2 consecutive days and baseline sleep following handling was recorded. On experimental day 1, the rats were injected (0.5 μl) into BLA with either MUS (1.0 μM; n = 7) or vehicle (distilled water, n = 7) 30 min prior to ST (20 footshocks, 0.8 mA, 0.5-s duration, 60-s interstimulus interval). On experimental days 7 and 21, the animals experienced CR (CR1 and CR2, respectively) alone. Electroencephalogram and electromyogram were recorded for 8 h on each day, and the recording was scored for non-rapid eye movement sleep, REM sleep, and wakefulness. Freezing was examined during CR1 and CR2. MUS microinjections into BLA prior to ST blocked the post-training reduction in REM sleep seen in vehicle-treated rats. Furthermore, in MUS-treated rats, REM sleep after CR1 and CR2 was at baseline levels and freezing was significantly attenuated. Thus, BLA inactivation prior to ST blocks the effects of footshock stress on sleep and reduces fear memory, as indicated by the lack of freezing and changes in sleep after CR. These data indicate that BLA is an important regulator of stress-induced alterations in sleep and an important site for forming fear memories that can alter sleep.