Background Sleep disorders are common in postmenopausal women and are linked to poor physical and mental health, which affect quality of life. Therefore, this study aimed to investigate the effect of resistive exercise on insomnia and sleep quality in postmenopausal women. Fifty-six postmenopausal women suffering from sleep disturbance and insomnia participated in this study. Their age ranged from 50–65 years, and their body mass index (BMI) was 25–29.5 kg/m2. They were randomly distributed into two groups of an equal number. Control group received self-care and lifestyle advice, while study group received the same advice in addition to resistive exercises for 20–30 min per session for 4 weeks. Plasma estradiol levels were assessed, as well as the Pittsburgh Sleep Quality Index and Insomnia Severity Index, which were used to evaluate sleep quality and insomnia pre- and post-treatment. Results Control group revealed a significant decrease (p < 0.001) in Pittsburgh sleep quality index and insomnia severity index and a non-significant difference (p = 0.059) in plasma estradiol level post-treatment. However, study group showed a significant decrease (p < 0.001) in Pittsburgh sleep quality index and insomnia severity index, as well as a significant increase (p = 0.001) in plasma estradiol level. Compared to control group, study group showed a significant decrease (p = 0.000) in insomnia and sleep quality, as well as a non-significant difference (p = 0.179) in estradiol level post-treatment. Also, there was a negative correlation between plasma estradiol level and insomnia severity score in the study group post-treatment. Conclusion Resistive exercise is an effective modality for postmenopausal women suffering from sleep disorders as it improves insomnia, sleep quality, which in turn affects the quality of life. Increased estradiol level is an important factor that helps improve insomnia in postmenopausal women.