Emotional memories change over time, but the mechanisms supporting this change are not well understood. Sleep has been identified as one mechanism that supports memory consolidation, with sleep selectively benefitting negative emotional consolidation at the expense of neutral memories, with specific oscillatory events linked to this process. In contrast, the consolidation of neutral and positive memories, compared to negative memories, has been associated with increased vagally-mediated vagal heart rate variability (HRV) during wakefulness. However, how HRV during sleep contributes to emotional memory consolidation remains unexplored. We investigated how sleep oscillations and vagal contributions during sleep contribute to the consolidation of neutral and negative memories. Using a double-blind, placebo-controlled, within-subject, cross-over design, we examined the impact of pharmacological vagal suppression using zolpidem on overnight emotional memory consolidation. Thirty-two participants encoded neutral and negative pictures in the morning, followed by picture recognition tests before and after a night of sleep. Zolpidem or placebo was administered in the evening before overnight sleep, and participants were monitored with electroencephalography and electrocardiography. In the placebo condition, greater overnight improvement for neutral pictures was associated with higher vagal HRV in both Non-Rapid Eye Movement Slow Wave Sleep (NREM SWS) and REM. Additionally, the emotional memory tradeoff (i.e., difference between consolidation of neutral versus negative memories) was associated with higher vagal HRV during REM, but in this case, neutral memories were remembered better than negative memories, indicating a potential role for REM vagal HRV in promoting a positive memory bias overnight. Zolpidem, on the other hand, reduced vagal HRV during SWS, increased NREM sigma power, and eliminated the positive memory bias. Lastly, we used a stepwise linear mixed effects regression to determine how NREM sigma power and vagal HRV during REM independently explained the variance in the emotional memory tradeoff effect. We found that the addition of vagal HRV in combination with sleep significantly improved the model's fit. Overall, our results suggest that sleep brain oscillations and vagal signals synergistically interact in the overnight consolidation of emotional memories, with REM vagal HRV critically contributing to the positive memory bias.