Sleep is an important physiological state for the consolidation and generalization of new learning in children and adults. We review the literature on sleep-dependent memory consolidation and generalization in infants and preschool children and place the findings in the context of the development of the neural systems underlying memory (hippocampus and its connections to cortex). Based on the extended trajectory of hippocampal development, transitions in the nature of sleep-dependent learning are expected. The studies reviewed here show shifts in the nature of sleep-dependent learning across early childhood, with sleep facilitating generalization in infants but enhancing precise memory after 18-24 months of age. Future studies on sleep-dependent learning in infants and young children must take these transitions in early brain development into account.