Sleep, a universal behavior, is critical for diverse aspects of brain function. Chronic sleep disturbance is associated with numerous health consequences, including neurodegenerative disease and cognitive decline. Neurite damage due to apoptosis, trauma, or genetic factors is a common feature of aging, and clearance of damaged neurons is essential for maintenance of brain function. In the central nervous system, damaged neurites are cleared by Wallerian degeneration, in which activated microglia and macrophages engulf damaged neurons. The fruit fly Drosophila melanogaster provides a powerful model for investigating the relationship between sleep and Wallerian degeneration. Several lines of evidence suggest that glia influence sleep duration, sleep-mediated neuronal homeostasis, and clearance of toxic substances during sleep, raising the possibility that glial engulfment of damaged axons is regulated by sleep. To explore this possibility, we axotomized olfactory receptor neurons and measured the effects of sleep loss or gain on the clearance of damaged neurites. Mechanical sleep deprivation impaired the clearance of damaged neurites, whereas the sleep-promoting drug gaboxadol accelerated clearance. In sleep-deprived animals, multiple markers of glial activation were delayed, including activation of the JAK/STAT pathway, upregulation of the cell corpse engulfment receptor Draper, and innervation of the antennal lobe by glial membranes. These markers were all enhanced when sleep was induced in gaboxadol-treated flies. Taken together, these findings reveal a critical role for sleep in regulation glial activation and engulfment following axotomy, providing a platform for further investigations of the molecular mechanisms underlying sleep-dependent modulation of glial function and neurite clearance.