SummarySleep reactivity is a predisposition to sleep disturbance during environmental perturbations, pharmacological challenges, or stressful life events. Consequently, individuals with highly reactive sleep systems are prone to insomnia disorder after a stressor, engendering risk of psychopathology and potentially impeding recovery from traumatic stress. Thus, there is tremendous value in ameliorating sleep reactivity to foster a sleep system that is robust to stress exposure, ultimately preventing insomnia and its downstream consequences. We reviewed prospective evidence for sleep reactivity as a predisposition to insomnia since our last review on the topic in 2017. We also reviewed studies investigating pre‐trauma sleep reactivity as a predictor of adverse post‐traumatic sequelae, and clinical trials that reported the effect of behavioural treatments for insomnia on mitigating sleep reactivity. Most studies measured sleep reactivity via self‐report using the Ford Insomnia Response to Stress Test (FIRST), demonstrating high scores on this scale reliably indicate a sleep system with a lower capacity to tolerate stress. Nascent evidence suggests elevated sleep reactivity prior to trauma increases the risk of negative posttraumatic outcomes, namely acute stress disorder, depression, and post‐traumatic stress disorder. Lastly, sleep reactivity appears most responsive to behavioural insomnia interventions when delivered early during the acute phase of insomnia. Overall, the literature strongly supports sleep reactivity as a premorbid vulnerability to incident acute insomnia disorder when faced with an array of biopsychosocial stressors. The FIRST identifies individuals at risk of insomnia a priori, thereby guiding early interventions toward this vulnerable population to prevent insomnia and promote resilience to adversity.