1. A method is described for recording from single cells in the hypothalamus of unanaesthetized freely moving rabbits. Behaviour, bodily movement, skin and brain temperatures and e.e.g. were monitored.2. Patterns of unit firing during slow sleep, paradoxical sleep and waking were studied in several regions of the hypothalamus, thalamus and in the septum.3. Of the 144 cells analysed from waking to slow sleep, fifty-six (39%) decreased mean firing rates, thirty (21%) increased spike discharges and fifty-eight (40%) showed no marked change. Dorsal hypothalamic and massa intermedia thalamic cells fired in brief high frequency clusters during slow sleep with a characteristic ;bimodal' interspike interval histogram. Waking and paradoxical sleep abolished these cluster discharges with a concomitant change to an ;asymmetric' histogram.4. Of the thirty-two cells observed during the three states of waking, slow sleep and paradoxical sleep, a majority (twenty-five or 78%) showed their highest rates of spontaneous discharge during paradoxical sleep. Discharge rates of cells sometimes changed in the course of paradoxical sleep according to the presence or absence of phasic events such as myoclonic motor activity. Two hypothalmic cells were almost totally arrested during paradoxical sleep.5. Analysis of unit firing rates during spontaneous rises in brain temperature during waking and paradoxical sleep revealed that a majority of the neurones (22/24) changed their discharge rates in relation to behaviour rather than to brain temperature. Two cells did appear to respond specifically to the central thermal stimulus.6. Hypothalamic cells do not behave as a homogeneous population in relation to changes in the state of arousal of the rabbit. Spontaneous changes in cell discharge related to sleep-waking behaviour must be considered in any interpretation of hypothalamic unit activity as related to neuroendocrine or autonomic mechanisms.