Sleep, constituting approximately one-third of the human lifespan, is a crucial physiological process essential for physical and mental well-being. Normal sleep consists of an orderly progression through wakefulness, non-rapid eye movement (NREM) sleep, and rapid eye movement (REM) sleep, all of which are tightly regulated. Melatonin, often referred to as the "hormone of sleep," plays a pivotal role as a regulator of the sleep/wake cycle and exerts its effects through high-affinity G-protein coupled receptors known as MT1 and MT2. Selective modulation of these receptors presents a promising therapeutic avenue for sleep disorders. This review examines research on the multifaceted role of melatonin in sleep regulation, focusing on selective ligands targeting MT1 and MT2 receptors, as well as studies involving MT1 and MT2 knockout mice. Contrary to common beliefs, growing evidence suggests that melatonin, through MT1 and MT2 receptors, might not only influence circadian aspects of sleep but likely, also modulate the homeostatic process of sleep and sleep architecture, or could be the molecule linking the homeostatic and circadian regulation of sleep. Furthermore, the distinct brain localization of MT1 and MT2 receptors, with MT1 receptors primarily regulating REM sleep and MT2 receptors regulating NREM sleep, is discussed. Collectively, sleep regulation extends beyond the circulating levels and circadian peak of melatonin; it also critically involves the expression, molecular activation, and regulatory functions of MT1 and MT2 receptors across various brain regions and nuclei involved in the regulation of sleep. This research underscores the importance of ongoing investigation into the selective roles of MT1 and MT2 receptors in sleep. Such research efforts are expected to pave the way for the development of targeted MT1 or MT2 receptors ligands, thereby optimizing therapeutic interventions for sleep disorders.