When mice are exposed to external warmth, nitric oxide synthase (NOS1) neurons in the median and medial preoptic (MnPO/MPO) hypothalamus induce sleep and concomitant body cooling. However, how these neurons regulate baseline sleep and body temperature is unknown. Using calcium photometry, we show that NOS1 neurons in MnPO/MPO are predominantly NREM and REM active, especially at the boundary of wake to NREM transitions, and in the later parts of REM bouts, with lower activity during wakefulness. In addition to releasing nitric oxide, NOS1 neurons in MnPO/MPO can release GABA, glutamate and peptides. We expressed tetanus-toxin light-chain in MnPO/MPO NOS1 cells to reduce vesicular release of transmitters. This induced changes in sleep structure: over 24 h, mice had less NREM sleep in their dark (active) phase, and more NREM sleep in their light (sleep) phase. REM sleep episodes in the dark phase were longer, and there were fewer REM transitions between other vigilance states. REM sleep had less theta power. Mice with synaptically blocked MnPO/MPO NOS1 neurons were also warmer than control mice at the dark-light transition (ZT0), as well as during the dark phase siesta (ZT16-20), where there is usually a body temperature dip. Also, at this siesta point of cooled body temperature, mice usually have more NREM, but mice with synaptically blocked MnPO/MPO NOS1 cells showed reduced NREM sleep at this time. Overall, MnPO/MPO NOS1 neurons promote both NREM and REM sleep and contribute to chronically lowering body temperature, particularly at transitions where the mice normally enter NREM sleep.