Acetylcholine (ACh) plays a key role in the transitions between the different phases of sleep: Slow-wave sleep requires low ACh concentrations in the brain, whereas rapid-eye-movement (REM) sleep is associated with high levels of ACh. Also, these phases of sleep are differentially sensitive to a number of endogenous neuropeptides and cytokines, including somatostatin, which has been shown to increase REM sleep without significantly affecting other phases. Here we report the cloning and initial characterization of cortistatin, a neuropeptide that exhibits strong structural similarity to somatostatin, although it is the product of a different gene. Administration of cortistatin depresses neuronal electrical activity but, unlike somatostatin, induces low-frequency waves in the cerebral cortex and antagonizes the effects of acetylcholine on hippocampal and cortical measures of excitability. This suggests a mechanism for cortical synchronization related to sleep.