Surveillance studies are useful to evaluate how a new medicinal product performs in everyday treatment and how the patient who takes it feels and functions, thereby determining the benefit/risk ratio of the drug under real-life conditions. Prolonged-release melatonin (PRM; Circadin) was approved in Europe for the management of primary insomnia patients age 55 years or older suffering from poor quality of sleep. With traditional hypnotics (e.g. benzodiazepine-receptor agonists), there are concerns about rebound insomnia and/or withdrawal symptoms. We report data from a postmarketing surveillance study in Germany on the effects of 3 weeks of treatment with PRM on sleep in patients with insomnia during treatment and at early (1–2 days) and late (around 2 weeks) withdrawal. In total, 653 patients (597 evaluable) were recruited at 204 sites (mean age 62.7 years, 68% previously treated with hypnotics, 65% women). With PRM treatment, the mean sleep quality (on a scale of 1–5 on which 1 is very good and 5 is very bad) improved from 4.2 to 2.6 and morning alertness improved from 4.0 to 2.5. The improvements persisted over the post-treatment observation period. Rebound insomnia, defined as a one-point deterioration in sleep quality below baseline values, was found in 3.2% (early withdrawal) and 2.0% (late withdrawal). Most of the patients (77%) who used traditional hypnotics before PRM treatment had stopped using them and only 5.6% of naive patients started such drugs after PRM discontinuation. PRM was well tolerated during treatment and the most frequently reported adverse events were nausea (10 patients, 1.5%), dizziness, restlessness and headache (five patients each, <1%). There were no serious adverse events and no adverse events were reported after discontinuation. The persisting treatment effect and very low rebound rate suggest a beneficial role of sleep–wake cycle stabilization with PRM in the treatment of insomnia.