Sleep disturbances are among the most prominent correlates of mood episodes and inadequate recovery in bipolar disorder, yet the mechanistic relationship between sleep physiology and mood remains poorly understood. The present study investigated the connection between mood dysregulation and deficient sleep homeostasis during the interepisode phase of bipolar disorder. Individuals with interepisode bipolar disorder (n = 24) and healthy adult controls (n = 26) slept in the laboratory for 2 baseline nights, a happy mood induction night, and a sad mood induction night. Sleep was recorded using polysomnography and spectral analysis was conducted on the sleep EEG for each of the four overnights. Relative slow wave activity (SWA; 0.75-4.75Hz) during non-rapid eye movement sleep was derived as an index of sleep homeostasis. On the mood induction nights, mood was evaluated using an affect grid pleasantness rating at 3 time points: pre-induction, post- induction and the next morning. The bipolar and control groups did not exhibit baseline differences in SWA. A greater proportion of bipolar patients experienced a reduction in SWA from baseline to the sad night relative to controls. Reduced SWA following the sad mood induction predicted impaired overnight negative mood improvement in the bipolar group, while this relationship was not observed in the control group. Following the happy mood induction, both groups experienced an increase in SWA, though SWA did not exhibit a significant relationship with overnight mood change for either group. The present findings indicate that interepisode bipolar patients may be more vulnerable to negative mood-related SWA disruptions, which in turn serve to sustain negative mood from the previous day. Furthermore, positive mood can enhance SWA in both bipolar patients and healthy adults.