Sleep disturbances, including nightmares and insomnia, are prominent following trauma and with posttraumatic stress disorder (PTSD) and likely contribute to the pathogenesis of the disorder. Findings from laboratory studies of PTSD have been inconsistent in terms of documenting objective impaired sleep maintenance but have been somewhat more consistent in indicating alterations of rapid eye movement (REM) sleep. Studies of the early aftermath of trauma can reduce the complexity associated with chronicity and comorbidity, and may have implications for early diagnosis and prevention. Multiple studies indicate that dream content is affected by recent threatening experiences. The development of PTSD is associated with a more replicative type of nightmare content. Sleep is reported to be generally disrupted following trauma especially among those developing PTSD. The limited number of studies that provide objective recorded indices during the early aftermath of trauma also provide a mixed picture regarding overall sleep maintenance. Recent data suggest that a more specific disruption of REM sleep may be associated with the development of PTSD and that this disruption is associated with an increased signal of sympathetic nervous system activation during REM sleep. Disrupted REM sleep and increased sympathetic/noradrenergic activity may have implications for understanding recent promising interventions for PTSD sleep disturbance that can be applied to early intervention.