Sleep problems are a common concern for persons with mental retardation and severe behavior problems, yet few empirically validated treatment options exist. In the current investigation, the efficacy of a faded bedtime with response cost treatment was compared with a bedtime scheduling procedure in treating the multiple sleep problems of two groups of children with mental retardation, sleep problems, and other severe behavior problems. Faded bedtime with response cost (FBRC) consisted of systematic delay of bedtime, removal from bed if sleep was not initiated within 15 minutes (response cost), and a fading procedure to gradually advance the bedtime. The bedtime scheduling procedure consisted of a consistent sleep and wake time and prevention of daytime sleep. The sleep of children in the FBRC group improved significantly more than the sleep of children in the bedtime scheduling group. Results are discussed in terms of behavioral and biological mechanisms which may contribute to the efficacy of FBRC.