Offering a new perspective on sleep state misperception, we discuss a patient who presented with sleep state misperception and was ultimately diagnosed with delusional disorder. A 60-year-old woman with chief complaints of insomnia, agitation, and suicidal ideation, was admitted to an inpatient psychiatric ward. Based on information from her family and a mental state examination, her primary diagnosis was sleep state misperception. She was treated with Trazodone. Because she was unresponsive to the treatment, a full psychiatric evaluation and wrist actigraphy report were undertaken, resulting in a revised diagnosis of delusional disorder. She was started on Olanzapine and, after 6 weeks was discharged with good improvement. Sleep state misperception might be considered not just as a sleep disorder, but also as a psychiatric disorder with psychotic symptoms. Further research is recommended.