The transition from wakefulness into sleep is accompanied by modified activity in the brain's thalamocortical network. Sleep-related decreases in thalamocortical functional connectivity (FC) have previously been reported, but the extent to which these changes differ between thalamocortical pathways, and patterns of intra-thalamic FC during sleep remain untested. To non-invasively investigate thalamocortical and intra-thalamic FC as a function of sleep stage we recorded simultaneous EEG-fMRI data in 13 healthy participants during their descent into light sleep. Visual scoring of EEG data permitted sleep staging. We derived a functional thalamic parcellation during wakefulness by computing seed-based FC, measured between thalamic voxels and a set of pre-defined cortical regions. Sleep differentially affected FC between these distinct thalamic subdivisions and their associated cortical projections, with significant increases in FC during sleep restricted to sensorimotor connections. In contrast, intra-thalamic FC, both within and between functional thalamic subdivisions, showed significant increases with advancement into sleep. This work demonstrates the complexity and state-specific nature of functional thalamic relationships--both with the cortex and internally--over the sleep/wake cycle, and further highlights the importance of a thalamocortical focus in the study of sleep mechanisms.