Sleep contributes to cognitive functioning and is sufficient to alter brain morphology and function. However, mechanisms underlying sleep regulation remain poorly understood. In mammals, tumor necrosis factor-alpha (TNFα) is known to regulate sleep, and cytokine expression may represent an evolutionarily ancient mechanism in sleep regulation. Here we show that the Drosophila TNFα homologue, Eiger, mediates sleep in flies. We show that knockdown of Eiger in astrocytes, but not in neurons, significantly reduces sleep duration, and total loss-of-function reduces the homeostatic response to sleep loss. In addition, we show that neuronal, but not astrocyte, expression of the TNFα receptor superfamily member, Wengen, is necessary for sleep deprivation-induced homeostatic response and for mediating increases in sleep in response to human TNFα. These data identify a novel astrocyte-to-neuron signaling mechanism in the regulation of sleep homeostasis and show that the Drosophila cytokine, Eiger, represents an evolutionarily conserved mechanism of sleep regulation across phylogeny.