Using an oddball paradigm with two tones differing in pitch and probability, event-related potentials (ERPs) were compared during wake and two sleep stages. REM and NREM sleep stages were identified in nine subjects using the Nightcap which continuously records eye and body movements. The N1 occurred later and the P2 was larger during sleep than when awake. The N1 to the infrequent tones was larger during both sleep stages. A late negative wave was significantly larger to infrequent tones during REM sleep. It is concluded that representations of auditory stimuli occur in sleep, and most prominently during the REM phase. The prolonged latency of the ERP components indicates that processing of external sensory stimuli may be delayed.