Insomnia is one of the major complaints of menopausal women with advancing age and may be complexly related to a variety of causes. However, there is still a lack of standards on the general approach and treatment for insomnia in menopausal women. The aim of this review is to summarize recent pathogenic theories of sleep disturbance in the menopausal period and discuss the approach and management of insomnia in postmenopausal women. Sleep disturbances in menopausal women may be associated with physical and psychiatric factors and other comorbid diseases. Careful history taking and multidisciplinary physical and psychosocial evaluation are necessary and, in particular, comorbidities related to sleep disorders, such as obstructive sleep apnea, must be taken into consideration. A unique aspect of insomnia in postmenopausal women is that menopausal symptoms due to hormonal decline can be closely related to sleep disturbances. Therefore, menopausal hormone therapy (MHT) should be considered as the treatment of choice among pharmacological treatments following cognitive behavioral therapy, which is suggested as the first-line treatment in the general population insomnia treatment guidelines. Additionally, melatonin and 5HT-based drugs, which have fewer side effects, along with MHT should be preferentially recommended in menopausal women.