Posttraumatic stress disorder (PTSD) is often associated with sleep disturbances. In this review, we focus on the published literature on subjective and objective findings of sleep in patients with PTSD. Insomnia and nightmares are most commonly reported subjective sleep disturbances. Polysomnographic investigations have frequently reported rapid eye movement (REM) sleep abnormalities in PTSD. However, studies have not been consistent about the type of REM sleep dysfunction in PTSD patients. Antidepressants such as nefazodone, trazodone, fluvoxamine, and imagery rehearsal therapy are found to be beneficial in the treatment of PTSD associated sleep disturbances as well as core symptoms of this anxiety disorder. We propose use of such modalities of treatment in PTSD patients with predominant sleep disturbances. Further studies are required to clarify polysomnographic sleep changes especially role of REM sleep dysregulation and treatment of sleep disturbances in PTSD.