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The lateral hypothalamus contains neurons producing orexins that promote wakefulness and suppress REM sleep as well as neurons producing melanin-concentrating hormone (MCH) that likely promote REM sleep. Narcolepsy with cataplexy is caused by selective loss of the orexin neurons, and the MCH neurons appear unaffected. As the orexin and MCH systems exert opposing effects on REM sleep, we hypothesized that imbalance in this REM sleep-regulating system due to activity in the MCH neurons may contribute to the striking REM sleep dysfunction characteristic of narcolepsy. To test this hypothesis, we chemogenetically activated the MCH neurons and pharmacologically blocked MCH signaling in a murine model of narcolepsy and studied the effects on sleep-wake behavior and cataplexy. To chemoactivate MCH neurons, we injected an adeno-associated viral vector containing the hM3Dq stimulatory DREADD into the lateral hypothalamus of orexin null mice that also express Cre recombinase in the MCH neurons (MCH-Cre::OX-KO mice) and into control MCH-Cre mice with normal orexin expression. In both lines of mice, activation of MCH neurons by clozapine-N-oxide (CNO) increased rapid eye movement (REM) sleep without altering other states. In mice lacking orexins, activation of the MCH neurons also increased abnormal intrusions of REM sleep manifest as cataplexy and short latency transitions into REM sleep (SLREM). Conversely, a MCH receptor 1 antagonist, SNAP 94847, almost completely eliminated SLREM and cataplexy in OX-KO mice. These findings affirm that MCH neurons promote REM sleep under normal circumstances, and their activity in mice lacking orexins likely triggers abnormal intrusions of REM sleep into non-REM sleep and wake, resulting in the SLREM and cataplexy characteristic of narcolepsy.