1. 1. The auditory averaged evoked response (AER) was measured at the vertex in age-matched groups of normal and autistic children during Stage 2 and REM sleep and during the ocular quiescent and eye movement burst phases of REM sleep. Amplitudes and latencies of wave N2 of the auditory AER were compared during these different sleep stages. 2. 2. In a group of sixteen autistic children under 5 years 1 month old, the relative amplitude of wave N2 during REM sleep (relative to Stage 2 sleep) was significantly greater than in a group of sixteen normal children. 3. 3. In a group of seventeen autistic children under 61 months old, the relative amplitude of wave N2 during the eye movement bursts (relative to ocular quiescence) was greater than that measured in a group of eighteen normal children. 4. 4. In a group of ten normal children under 61 months old, there was no appreciable difference between amplitudes of wave N2 obtained during the ocular quiescent phase of REM sleep and Stage 2 sleep. In contrast, amplitudes of wave N2 obtained during the eye movement burst phase of REM sleep were significantly smaller than during Stage 2. 5. 5. A group of eleven autistic children showed significantly larger relative amplitudes of wave N2 during both the ocular quiescent and the eye movement burst phases of REM sleep (relative to Stage 2 sleep) than did the group of ten normal children. The relative reduction of response amplitude during the eye movement bursts in normals was markedly overridden in these autistic subjects. 6. 6. The finding that relative reduction of response amplitude during REM sleep in normals is confined to the eye movement burst phase was related to the concept of phasic inhibition distinct from tonic inhibition during REM sleep. The phasic inhibition has been shown to be mediated by vestibular nuclei. The overriding of phasic inhibition in the autistic children was related to clinical observations suggesting vestibular dysfunction and faulty registration of the significance of sensory input. © 1968.