Sleep is characterized by synchronized events in billions of synaptically coupled neurons in thalamocortical systems. The activation of a series of neuromodulatory transmitter systems during awakening blocks low-frequency oscillations, induces fast rhythms, and allows the brain to recover full responsiveness. Analysis of cortical and thalamic networks at many levels, from molecules to single neurons to large neuronal assemblies, with a variety of techniques, ranging from intracellular recordings in vivo and in vitro to computer simulations, is beginning to yield insights into the mechanisms of the generation, modulation, and function of brain oscillations.