--- - |2+ Background Sleep disturbance is frequently comorbid with depression and sleep complaints are the most common residual symptoms after treatment among adolescents with depression. The present analyses investigated the effect of sleep disturbance in depressed adolescents treated with interpersonal psychotherapy for adolescents (IPT‐A) versus treatment as usual (TAU) in school‐based mental health clinics. Method Sixty‐three adolescents participated in a randomized clinical trial of IPT‐A versus TAU for adolescent depression. Participants were diagnosed with a DSM‐IV depressive disorder and assessed for symptoms of depression, interpersonal functioning, and sleep disturbance. Measures were assessed at baseline, session 4 and 8 of treatment, and session 12 for postacute treatment follow‐up. Hierarchical linear modeling was used to model change in depression, interpersonal functioning, and sleep disturbance. Results Ongoing sleep disturbance was significantly associated with worse depression scores as rated by clinician (γ = 1.04, SE = .22, p < .001) and self‐report (γ = 1.63, SE = .29, p < .001), as well as worse interpersonal functioning across the course of treatment (γ = 0.09, SE = .02, p < .001). Treatment condition did not predict change in sleep disturbance (γ = −0.13, SE = .14, p = ns). Conclusions For all patients in the study, sleep disturbance was a predictor of depression and interpersonal functioning for depressed adolescents. Sleep disturbance predicted more depression and interpersonal stress across treatments and led to a slower improvement in depression and interpersonal functioning. These data suggest that sleep disturbance should be a target for future treatment development research among depressed adolescents. - Journal of Child Psychology and Psychiatry, Page 96-99, October 2018.