Ambient temperature (Ta) warming toward the high end of the thermoneutral zone (TNZ) preferentially increases rapid eye movement (REM) sleep over non-REM (NREM) sleep across species. The control and function of this temperature-induced REM sleep expression have remained unknown. Melanin-concentrating hormone (MCH) neurons play an important role in REM sleep control. We hypothesize that the MCH system may modulate REM sleep as a function of Ta. Here, we show that wild-type (WT) mice dynamically increased REM sleep durations specifically during warm Ta pulsing within the TNZ, compared to both the TNZ cool and baseline constant Ta conditions, without significantly affecting either wake or NREM sleep durations. However, genetically engineered MCH receptor-1 knockout (MCHR1-KO) mice showed no significant changes in REM sleep as a function of Ta, even with increased sleep pressure following a 4-h sleep deprivation. Using MCH-cre mice transduced with channelrhodopsin, we then optogenetically activated MCH neurons time locked with Ta warming, showing an increase in REM sleep expression beyond what Ta warming in yellow fluorescent protein (YFP) control mice achieved. Finally, in mice transduced with archaerhodopsin-T, semi-chronic optogenetic MCH neuronal silencing during Ta warming completely blocked the increase in REM sleep seen in YFP controls. These data demonstrate a previously unknown role for the MCH system in the dynamic output expression of REM sleep during Ta manipulation. These findings are consistent with the energy allocation hypothesis of sleep function, suggesting that endotherms have evolved neural circuits to opportunistically express REM sleep when the need for thermoregulatory defense is minimized. Display omitted •Wild-type mice dynamically increase REM sleep with ambient temperature (Ta) warming•Optogenetic MCH activation overdrives REM sleep expression during Ta warming•Optogenetic MCH silencing or lack of MCH receptor blocks Ta modulation of REM sleep•The MCH system plays a critical role in modulating REM sleep as a function of Ta The control and function of temperature-induced REM sleep modulation have remained unknown. Komagata et al. show that the melanin-concentrating hormone system within the lateral hypothalamus plays a critical role in the dynamic ability of the organism to opportunistically increase REM sleep when the need for core body temperature defense is minimized.