Adequate sleep is essential for physical and mental health. We previously identified a missense mutation in the human DEC2 gene (BHLHE41) leading to the familial natural short sleep behavioral trait. DEC2 is a transcription factor regulating the circadian clock in mammals, although its role in sleep regulation has been unclear. Here we report that prepro-orexin, also known as hypocretin (Hcrt), gene expression is increased in the mouse model expressing the mutant hDEC2 transgene (hDEC2-P384R). Prepro-orexin encodes a precursor protein of a neuropeptide producing orexin A and B (hcrt1 and hcrt2), which is enriched in the hypothalamus and regulates maintenance of arousal. In cell culture, DEC2 suppressed prepro-orexin promoter-luc (ore-luc) expression through cis-acting E-box elements. The mutant DEC2 has less repressor activity than WT-DEC2, resulting in increased orexin expression. DEC2-binding affinity for the prepro-orexin gene promoter is decreased by the P384R mutation, likely due to weakened interaction with other transcription factors. In vivo, the decreased immobility time of the mutant transgenic mice is attenuated by an orexin receptor antagonist. Our results suggested that DEC2 regulates sleep/wake duration, at least in part, by modulating the neuropeptide hormone orexin.