Narcolepsy is a sleep disorder characterized by excessive daytime sleepiness, cataplexy, hypnagogic hallucinations, and sleep-onset rapid eye movement (REM) sleep periods. Narcolepsy is now identified to be a neurodegenerative disease, as there is a massive loss of neurons containing the neuropeptide, hypocretin/orexin. Orexin neurons are solely located in the hypothalamus, particularly in its perifornical, dorsomedial and lateral portions. Orexin fibers widely project throughout the brain and generally have excitatory effects on their postsynaptic cells. Patients with narcolepsy have a severe reduction in the levels of orexins in the cerebrospinal fluid, a finding consistent with orexin neuronal loss. Experimental models have been generated in order to study the physiology of the orexin system and narcolepsy. The discovery of orexin deficiency in narcolepsy is redefining the clinical entity of narcolepsy and offering novel diagnostic procedures. This article reviews the current understanding of narcolepsy and discusses the opportunity to explore the potential use of transplants as a therapeutical tool in order to treat narcolepsy.