Endogenous rhythmic behaviors are evolutionarily conserved and essential for life. In mammalian and invertebrate models, well-characterized neuronal circuits and evolutionarily conserved mechanisms regulate circadian behavior and sleep 1-4. In Drosophila, neuronal populations located in multiple brain regions mediate arousal, sleep drive, and homeostasis (reviewed in <up>3, 5-7</up>). Similar to mammals 8, there is also evidence that fly glial cells modulate the neuronal circuits controlling rhythmic behaviors, including sleep 1. Here, we describe a novel gene (CG14141; aka Nkt) that is required for normal sleep. NKT is a 162-amino-acid protein with a single IgC2 immunoglobulin (Ig) domain and a high-quality signal peptide 9, and we show evidence that it is secreted, similar to its C. elegans ortholog (OIG-4) 10. We demonstrate that Nkt-null flies or those with selective knockdown in either neurons or glia have decreased and fragmented night sleep, indicative of a non-redundant requirement in both cell types. We show that Nkt is required in fly astrocytes and in a specific set of wake-promoting neurons-the mushroom body (MB) α'β' cells that link sleep to memory consolidation 11. Importantly, Nkt gene expression is required in the adult nervous system for normal sleep, consistent with a physiological rather than developmental function for the Ig-domain protein.