To further our understanding of how gonadal steroids impact sleep biology, we sought to address the mechanism by which proestrus levels of cycling ovarian steroids, particularly estradiol (E2), suppress sleep in female rats. We showed that steroid replacement of proestrus levels of E2 to ovariectomized female rats, suppressed sleep to similar levels as those reported by endogenous ovarian hormones. We further showed that this suppression is due to the high levels of E2 alone, and that progesterone did not have a significant impact on sleep behavior. We found that E2 action within the Median Preoptic Nucleus (MnPN), which contains estrogen receptors (ERs), is necessary for this effect; antagonism of ERs in the MnPN attenuated the E2-mediated suppression of both non-Rapid Eye Movement (NREM) and Rapid Eye Movement (REM) sleep. Finally, we found E2 action at the MnPN is also sufficient for sleep suppression, as direct infusion of E2 into the MnPN suppressed sleep. Based on our findings, we predict proestrus levels of E2 alone, acting at the MnPN, mediate sex-hormone driven suppression of sleep in female rats.