Modulation between sleep and wake states is controlled by a number of heterogeneous neuron populations. Due to the topological proximity and genetic co-localization of the neurons underlying sleep-wake state modulation optogenetic methods offer a significant improvement in the ability to benefit from both the precision of genetic targeting and millisecond temporal control. Beginning with an overview of the neuron populations mediating arousal, this review outlines the progress that has been made in the investigation of arousal circuits since the incorporation of optogenetic techniques and the first in vivo application of optogenetic stimulation in hypocretin neurons in the lateral hypothalamus. This overview is followed by a discussion of the future progress that can be made by incorporating more recent technological developments into the research of neural circuits.