Nocturnal traffic noise can disrupt sleep and impair physical and mental restoration, but classical sleep scoring techniques may not fully capture subtle yet clinically relevant alterations of sleep induced by noise. We used a validated continuous measure of sleep depth and quality based on automatic analysis of physiologic sleep data, termed Wake Propensity (WP), to investigate temporal changes of sleep in response to nocturnal noise events in 3-s epochs. Seventy-two healthy participants (mean age 40.3 years, range 18-71 years, 40 females, 32 males) slept for 11 nights in a laboratory, during which we measured sleep with polysomnography. In 8 nights, participants were exposed to 40, 80 or 120 road, rail and/or aircraft noise events with maximum noise levels of 45-65 dB L during 8-h sleep opportunities. We analyzed sleep macrostructure and event-related change of WP during noise exposure with linear mixed models. Nocturnal traffic noise led to event-related shifts towards wakefulness and less deep, more unstable sleep (increase in WP relative to pre-noise baseline ranging from +29.5% at 45 dB to +38.3% at 65 dB; type III effect p < 0.0001). Sleep depth decreased dynamically with increasing noise level, peaking when L was highest. This change in WP was stronger and occurred more quickly for events where the noise onset was more rapid (road and rail) compared to more gradually time-varying noise (aircraft). Sleep depth did not immediately recover to pre-noise WP, leading to decreased sleep stability across the night compared to quiet nights, which was greater with an increasing number of noise events (standardized β = 0.053, p = 0.003). Further, WP was more sensitive to noise than classical arousals. Results demonstrate the usefulness of WP as a measure of the effects of external stimuli on sleep, and show WP is a more sensitive measure of noise-induced sleep disruption than traditional methods of sleep analysis.