Daily rhythms in sleep and waking performance are generated by the interplay of multiple external and internal oscillators. These include the light-dark and social cycles, a circadian hypothalamic oscillator oscillating virtually independently of behavior, and a homeostatic oscillator driven primarily by sleep-wake behavior. Both internal oscillators contribute to variation in many aspects of sleep and wakefulness (e.g., sleep timing and duration, REM sleep, non-REM sleep, REM density, sleep spindles, slow-wave sleep, electroencephalographic oscillations during wakefulness and sleep, and performance parameters, including attention and memory). The relative contribution of the oscillators varies greatly between these variables. Sleep and performance cannot be predicted by either oscillator independently but critically depend on their phase relationship and amplitude. The homeostatic oscillator feeds back onto the central pacemaker or its outputs. Thus, the amplitude of observed circadian variation in sleep and performance depends on how long we have been asleep or awake. During entrainment to external 24-h cycles, the opposing interplay between circadian and homeostatic changes in sleep propensity consolidates sleep and wakefulness. Some physiological correlates and mediators of both the circadian process (e.g., melatonin and hypocretin rhythms) and the homeostat (e.g., EEG, slow-wave activity, and adenosine release) have been established, offering targets for the development of countermeasures for circadian sleep and performance disorders. Interindividual differences in sleep timing, duration, and morning or evening preference are associated with changes of circadian or sleep homeostatic processes or both. Molecular genetic correlates, including polymorphisms in clock genes, of some of these interindividual differences are emerging.