Paradoxical insomnia is characterized by discrepancy between subjective and objective assessments of sleep and is challenging to diagnosis and treat. Typically, polysomnographic (PSG) findings show significantly longer total sleep time than patients' report of sleep, and the difference between subjective and PSG sleep is greater than that seen in other insomnia subtypes. Subjective–objective sleep discrepancy may also present in different clinical pictures, as marked discrepancies between patients' perception of sleep and objective findings are common in a variety of medical, sleep and psychiatric disorders. However, there is a paucity of literature about the etiology and treatment of sleep discrepancy and paradoxical insomnia. Therefore, the underlying neurophysiological mechanisms of sleep discrepancy and paradoxical insomnia should be further investigated. Additionally, well-controlled clinical trials are needed to establish an evidence based intervention for treatment.