Sleep disturbances are common in persons with Alzheimer's disease (AD) (Hart et al., 2003) and pose a great strain on their family caregivers (Hope, Keene, Gedling, Fairburn, & Jacoby, 1998) including their emotional functioning (Schulz & Martire, 2004). The current study is the first to examine the impact of daily sleep and mood in persons with AD on their caregiver's sleep and emotional functioning. The study examined sleep and mood across eight days in 40 family caregivers of persons with AD. It was hypothesized that poor sleep in the person with AD person would have a negative impact on caregiver emotional functioning the next day. Furthermore, it was hypothesized that sleep disruption or the mood in the person with AD would mediate the association between AD person sleep and caregiver mood. The results demonstrated a direct link between poor sleep in persons with AD and caregiver negative affect (NA), but not positive affect (PA). The results also indicated that poor caregiver sleep and NA in the person with AD partially mediated the relationship between AD person sleep and caregiver NA. The results suggest that addressing AD person and caregiver sleep and AD person affect may improve caregiver emotional functioning. Improving AD person sleep and mood, and caregiver emotional functioning has important implications that may prolong the time until institutionalization.