Neuropeptide S (NPS) is a regulatory peptide expressed by limited number of neurons in the brainstem. The simultaneous anxiolytic and arousal-promoting effect of NPS suggests an involvement in mood control and vigilance, making the NPS-NPS receptor system an interesting potential drug target. Here we examined, in detail, the distribution of NPS-immunoreactive (IR) fiber arborizations in brain regions of rat known to be involved in the regulation of sleep and arousal. Such nerve terminals were frequently apposed to GABAergic/galaninergic neurons in the ventro-lateral preoptic area (VLPO) and to tyrosine hydroxylase-IR neurons in all hypothalamic/thalamic dopamine cell groups. Then we applied the single platform-on-water (mainly REM) sleep deprivation method to study the functional role of NPS in the regulation of arousal. Of the three pontine NPS cell clusters, the NPS transcript levels were increased only in the peri-coerulear group in sleep-deprived animals, but not in stress controls. The density of NPS-IR fibers was significantly decreased in the median preoptic nucleus-VLPO region after the sleep deprivation, while radioimmunoassay and mass spectrometry measurements showed a parallel increase of NPS in the anterior hypothalamus. The expression of the NPS receptor was, however, not altered in the VLPO-region. The present results suggest a selective activation of one of the three NPS-expressing neuron clusters as well as release of NPS in distinct forebrain regions after sleep deprivation. Taken together, our results emphasize a role of the peri-coerulear cluster in the modulation of arousal, and the importance of preoptic area for the action of NPS on arousal and sleep.