A voluminous literature describes the relationship between disturbed sleep and depression. The breakdown of sleep is one of the cardinal features of depression and often also heralds its onset. Frequent arousals, periods of wakefulness and a short sleep onset REM latency are typical polysomnographic features of depression. The short latency to REM sleep has been attributed to the combination of a monoaminergic deficiency and cholinergic supersensitivity and these irregularities have been proposed to form the biological basis of the disorder. A similar imbalance between monoaminergic and cholinergic neurotransmission has been found in narcolepsy, a condition in which frequent awakenings, periods of wakefulness and short sleep onset REM latencies are also characteristic findings during sleep. In many cases of narcolepsy, this imbalance appears to result from a deficiency of hypocretin but once established, whether in depression or narcolepsy, this disequilibrium sets the stage for the dissociation or premature appearance of REM sleep and for the dissociation of the motor inhibitory component of REM sleep or cataplexy. In the presence of this monoaminergic/cholinergic imbalance, gammahydroxybutyrate (GHB) may acutely further reduce the latency of REM sleep and induce cataplexy, in both patients with narcolepsy or depression. On the other hand, the repeated nocturnal application of GHB in patients with narcolepsy improves the continuity of sleep, prolongs the latency to REM sleep and prevents cataplexy. Evidence to date suggests that GHB may restore the normal balance between monoaminergic and cholinergic neurotransmission. As such, the repeated use of GHB at night and the stabilization of sleep over time makes GHB an effective treatment for narcolepsy and a potentially effective treatment for depression.