In mammals, hypocretin/orexin (HCRT) neuropeptides are important sleep–wake regulators and HCRT deficiency causes narcolepsy. In addition to fragmented wakefulness, narcoleptic mammals also display sleep fragmentation, a less understood phenotype recapitulated in the zebrafish HCRT receptor mutant ( hcrtr −/−). We therefore used zebrafish to study the potential mediators of HCRT-mediated sleep consolidation. Similar to mammals, zebrafish HCRT neurons express vesicular glutamate transporters indicating conservation of the excitatory phenotype. Visualization of the entire HCRT circuit in zebrafish stably expressing hcrt:EGFP revealed parallels with established mammalian HCRT neuroanatomy, including projections to the pineal gland, where hcrtr mRNA is expressed. As pineal-produced melatonin is a major sleep-inducing hormone in zebrafish, we further studied how the HCRT and melatonin systems interact functionally. mRNA level of arylalkylamine-N-acetyltransferase (AANAT2), a key enzyme of melatonin synthesis, is reduced in hcrtr −/− pineal gland during the night. Moreover, HCRT perfusion of cultured zebrafish pineal glands induces melatonin release. Together these data indicate that HCRT can modulate melatonin production at night. Furthermore, hcrtr −/− fish are hypersensitive to melatonin, but not other hypnotic compounds. Subthreshold doses of melatonin increased the amount of sleep and consolidated sleep in hcrtr −/− fish, but not in the wild-type siblings. These results demonstrate the existence of a functional HCRT neurons-pineal gland circuit able to modulate melatonin production and sleep consolidation.