Arousal and anxiety are behavioral responses that involve complex neurocircuitries and multiple neurochemical components. Here, we report that a neuropeptide, neuropeptide S (NPS), potently modulates wakefulness and could also regulate anxiety. NPS acts by activating its cognate receptor (NPSR) and inducing mobilization of intracellular Ca²⁺. The NPSR mRNA is widely distributed in the brain, including the amygdala and the midline thalamic nuclei. Central administration of NPS increases locomotor activity in mice and decreases paradoxical (REM) sleep and slow wave sleep in rats. NPS was further shown to produce anxiolytic-like effects in mice exposed to four different stressful paradigms. Interestingly, NPS is expressed in a previously undefined cluster of cells located between the locus coeruleus (LC) and Barrington's nucleus. These results indicate that NPS could be a new modulator of arousal and anxiety. They also show that the LC region encompasses distinct nuclei expressing different arousal-promoting neurotransmitters.