Sleep and circadian rhythm dysfunctions are common clinical features of Alzheimer’s disease (AD). Increasing evidence suggests that in addition to being a symptom, sleep disturbances can also drive the progression of neurodegeneration. Protein aggregation is a pathological hallmark of AD; however, the molecular pathways behind how sleep affects protein homeostasis remain elusive. Here we demonstrate that sleep modulation influences proteostasis and the progression of neurodegeneration in Drosophila models of tauopathy. We show that sleep deprivation enhanced Tau aggregational toxicity resulting in exacerbated synaptic degeneration. In contrast, sleep induction using gaboxadol led to reduced toxic Tau accumulation in neurons as a result of modulated autophagic flux and enhanced clearance of ubiquitinated Tau, suggesting altered protein processing and clearance that resulted in improved synaptic integrity and function. These findings highlight the complex relationship between sleep and regulation of protein homeostasis and the neuroprotective potential of sleep-enhancing therapeutics to slow the progression or delay the onset of neurodegeneration.