Sleep disorders are common in children with mental retardation and neurologic disorders. Melatonin, a recently developed natural compound, has been used successfully in sleep disorders. I report my experience with melatonin in an open, prospective trial to treat circadian rhythm sleep disorder in handicapped children. The sleep disorder had been present for at least 6 months and had not responded to at least one hypnotic drug. The therapeutic response was recorded according to the average number of hours asleep per 24 hours, average number of awakening per night, average number of nights with delayed sleep onset, and average number of nights with early morning arousals. Ten consecutive children (four males, six females; age range = 1-11 years, mean 5.4) were included. Nine children had documented mental retardation that was severe in six (67%). Most had epilepsy and visual impairment (70%). All children were monitored for 4-12 months (mean 7.5 months) after the initiation of 3-mg bedtime melatonin. Most (80%) had a dramatic response to melatonin. No side effects were reported. Melatonin is a well-tolerated, safe, relatively inexpensive, and effective drug, with minimal side effects, for the treatment of severe circadian rhythm sleep disorder in handicapped children. Wider use of this drug is recommended.