Intervention by medical clowns was proven to have a positive effect in reducing stress and anxiety, increasing cooperation and improving the child's experience prior to a medical procedure and during the various stages of hospitalization. Sleep has long been known to be essential for recovery from injury and sickness, improving immune functions, and there is an emerging understanding of the restorative role quality sleep has on health and diseases. Hospitalized children are more exposed to sleep disorders and sleep deprivation due to the hospitalized environment, anxiety, and illness. Different behavioral interventions to promote sleep were previously studied in hospitalized children, some showing potential benefits. In this study, we sought to examine the ability of medical clowns to positively impact the child's sleep during hospitalization. The study is an observational matching (case–control) interventional study which took place at the department of pediatrics in Carmel Medical Center. Forty-two hospitalized children ages 2–17 were included in two equal groups of intervention or control. Children in the control group were recruited based on a method of matching the chief complaint plus the medical diagnosis and age of the children in the intervention group in a 1:1 matching. The children's sleep parameters were objectively evaluated for two consecutive nights using an Actigraph device and subjectively by parent's questionnaire. Additional factors such as hospital length of stay and demographics were also monitored. The study group had an encounter with a medical clown (15–30 min) before bedtime on either the first or the second night, and the control group was not exposed to a medical clown at all. We then compared the data from both groups using unpaired t-tests. Hospitalized children exposed to a medical clown prior to bedtime (n = 21) and children not exposed to a medical clown (n = 21) were comparable in age and clinical characteristics. The study group had a significantly delayed wake-up time compared to the control group (06:59 ± 46 min vs. 07:26 ± 42 min, p < 0.05) (mean difference of 27 min). Night's duration (from bedtime to wake-up) was significantly longer in the study versus the control group (570 ± 76 vs. 500 ± 66.1 min, p < 0.05), a total mean increase of 70 min, and sleep efficiency were significantly increased (92.3 ± 4.6% vs. 87.9 ± 8.7%, p < 0.05). Within the clown group, when comparing nights with and without exposure to a medical clown, total sleep time was prolonged by a mean of 54 min on the night of the intervention (518 ± 74 min vs. 464 ± 59 min, p < 0.01), and the total wake time during the night were reduced (52 ± 27 min vs. 77 ± 61 min, P < 0.05), mean difference of 25 min), mainly by reduction of wake period after sleep onset (WASO) (42 ± 25 min vs. 66 ± 58 min, p < 0.05), mean difference of 24 min). Regarding general medical outcomes, hospital stay was significantly shorter in the clown group vs. control (104 ± 42 h vs. 128 ± 42 h, p < 0.05), a mean reduction of 23 h—nearly an entire day. An encounter with a medical clown before bedtime in hospitalized children positively affects sleep parameters, which may be of great importance for healing in general. The clown intervention was also shown to shorten the hospital stay. Larger scale studies are warranted to establish these findings.