The primary goal of this study was to examine sleep problems in a sample of cocaine-exposed 7-month-old infants and to determine if maternal psychopathology mediated any existing association between substance exposure and sleep behaviors. We also examined the differences in sleep behaviors of cocaine-exposed infants in parental custody and cocaine-exposed infants in nonparental custody. Participants were 65 cocaine-exposed and 53 nonexposed infants and their primary caregivers who were recruited at delivery and assessed at 7 months of infant age. As expected, women who used cocaine during pregnancy had more psychiatric symptoms than nonusers. Prenatal exposure to heavier amounts of cocaine was significantly related to more severe sleep difficulties, and maternal anxiety mediated this association. Approximately 28% of cocaine mothers lost custody of their infants by 7 months of age. Nonmaternal caregivers had significantly fewer symptoms of psychopathology than the cocaine-using women who retained custody of their children. Infants who were in nonparental care at 7 months of age also had less severe sleep problems than did infants who remained in parental care.