The prefrontal cortex (PFC) enables mammals to respond to situations, including internal states, with appropriate actions. One such internal state could be ‘tiredness’. Here, using activity tagging in the mouse PFC, we identified particularly excitable, fast-spiking, somatostatin-expressing, γ-aminobutyric acid (GABA) (PFCSst-GABA) cells that responded to sleep deprivation. These cells projected to the lateral preoptic (LPO) hypothalamus and the lateral hypothalamus (LH). Stimulating PFCSst-GABA terminals in the LPO hypothalamus caused sleep-preparatory behavior (nesting, elevated theta power and elevated temperature), and stimulating PFCSst-GABA terminals in the LH mimicked recovery sleep (non-rapid eye-movement sleep with higher delta power and lower body temperature). PFCSst-GABA terminals had enhanced activity during nesting and sleep, inducing inhibitory postsynaptic currents on diverse cells in the LPO hypothalamus and the LH. The PFC also might feature in deciding sleep location in the absence of excessive fatigue. These findings suggest that the PFC instructs the hypothalamus to ensure that optimal sleep takes place in a suitable place.