Hyperarousal is a key symptom of anxiety, stress-related disorders, and insomnia. However, it has been conceptualized in many different ways, ranging from various physiological markers (e.g. cortisol levels, high-frequency EEG activity) to personality traits, or state assessments of subjective anxiety and tension. This approach resulted in partly inconsistent evidence, complicating unified interpretations. Crucially, no previous studies addressed the likely variability of hyperarousal within and across days, nor the relationship of such variability in hyperarousal with the night-by-night variability in sleep quality characteristic of insomnia.Here, we present a novel data-driven approach to understanding dynamics of state hyperarousal in insomnia. Using ecological momentary assessment, we tracked fluctuations in a wide range of emotions across 9 days in 169 people with insomnia disorders and 38 controls without sleep problems. Exploratory factor analysis identified a hyperarousal factor, comprised of items describing tension and distress. People with insomnia scored significantly higher on this factor than controls at all timepoints. In both groups, the hyperarousal factor score peaked in the morning and waned throughout the day, pointing to a potential contributing role of sleep or other circadian processes. Importantly, the overnight increase in hyperarousal was stronger in people with in insomnia than in controls. Subsequent adaptive LASSO regression analysis revealed a stronger overnight increase in hyperarousal across nights of worse subjective sleep quality.These findings demonstrate the relationship between subjective sleep quality and overnight modulations of hyperarousal. Disorders in which hyperarousal is a predominant complaint might therefore benefit from interventions focused on improving sleep quality.