Study Objectives: While many studies have examined the association between insomnia and depression, no studies have evaluated these associations 1) within a narrow time frame, 2) with specific reference to acute & chronic insomnia, and 3) using polysomnography. In the present study, the association between insomnia and first-onset depression was evaluated taking into account these considerations. Design: A mixed-model inception design. Setting: Academic research laboratory. Participants: Fifty-four individuals (acute insomnia (n=33), normal sleepers (n=21)) with no reported history of a sleep disorder, chronic medical condition, or psychiatric illness. Interventions: N/A Measurements and Results: Participants were assessed at baseline (two nights of polysomnography and psychometric measures of stress and mood) and insomnia and depression status were reassessed at 3 months. Individuals with acute insomnia exhibited more stress, poorer mood, worse subjective sleep continuity, increased N2 sleep and decreased N3 sleep. Individuals that transitioned to chronic insomnia exhibited (at baseline) shorter REM Latencies and reduced N3 sleep. Individuals that exhibited this pattern, in the transition from acute to chronic insomnia, were also more likely to develop first-onset depression (9.26%) as compared to those who remitted from insomnia (1.85%) or were normal sleepers (1.85%). Conclusion: The transition from acute to chronic insomnia is presaged by baseline differences in sleep architecture that have, in the past, been ascribed to Major Depression, either as heritable traits or as acquired traits from prior episodes of depression. The present findings suggest that the “sleep architecture stigmata” of depression may actually develop over the course transitioning from acute to chronic insomnia.