An unknown aspect of behavioral state regulation is how the circadian oscillator of the suprachiasmatic nucleus (SCN) regulates sleep and waking. In this report, we describe the necessary elements for a circuit that provides circadian regulation of arousal. Trans-synaptic retrograde tracing revealed a prominent indirect projection from the SCN to the noradrenergic nucleus locus coeruleus (LC), a brain arousal system. Double-labeling experiments revealed several possible links between the SCN and the LC, including the dorsomedial (DMH) and paraventricular hypothalamic nuclei (PVN), as well as medial and ventrolateral pre-optic areas. Lesion studies confirmed that the DMH is a substantial relay in this circuit. Next, neurophysiology experiments revealed circadian variations in LC impulse activity. Lesions of the DMH eliminated these circadian changes in LC activity, confirming the functionality of the SCN–DMH–LC circuit. These results reveal mechanisms for regulation of circadian and sleep–waking functions.