Clinical and experimental data from the last nine decades indicate that the preoptic area of the hypothalamus is a critical node in a brain network that controls sleep onset and homeostasis. By contrast, we recently reported that a group of glutamatergic neurons in the lateral and medial preoptic area increases wakefulness, challenging the long-standing notion in sleep neurobiology that the preoptic area is exclusively somnogenic. However, the precise role of these subcortical neurons in the control of behavioral state transitions and cortical dynamics remains unknown. Therefore, in this study, we used conditional expression of excitatory hM3Dq receptors in these preoptic glutamatergic (Vglut2) neurons and show that their activation initiates wakefulness, decreases non-rapid eye movement (NREM) sleep, and causes a persistent suppression of rapid eye movement (REM) sleep. We also demonstrate, for the first time, that activation of these preoptic glutamatergic neurons causes a high degree of NREM sleep fragmentation, promotes state instability with frequent arousals from sleep, decreases body temperature, and shifts cortical dynamics (including oscillations, connectivity, and complexity) to a more wake-like state. We conclude that a subset of preoptic glutamatergic neurons can initiate, but not maintain, arousals from sleep, and their inactivation may be required for NREM stability and REM sleep generation. Further, these data provide novel empirical evidence supporting the hypothesis that the preoptic area causally contributes to the regulation of both sleep and wakefulness. Historically, the preoptic area of the hypothalamus has been considered a key site for sleep generation. However, emerging modeling and empirical data suggest that this region might play a dual role in sleep-wake control. We demonstrate that chemogenetic stimulation of preoptic glutamatergic neurons produces brief arousals that fragment sleep, persistently suppresses REM sleep, causes hypothermia, and shifts EEG patterns toward a "lighter" NREM sleep state. We propose that preoptic glutamatergic neurons can initiate, but not maintain, arousal from sleep and gate REM sleep generation, possibly to block REM-like intrusions during NREM-to-wake transitions. In contrast to the long-standing notion in sleep neurobiology that the preoptic area is exclusively somnogenic, we provide further evidence that preoptic neurons also generate wakefulness.