For many years, scientists have been trying to understand the connection between sleep and memory. A multitude of research, experiments and studies have been conducted for this purpose, however the underlying mechanism of this connection is still a question mark. Although there is no clear mechanism by which sleep affects our memory, there is no denying that the two are interrelated.
Before we jump into the theories that have been proposed by researchers on this topic, we first need to be familiar with the different types or stages of sleep, as well as the types of memories first.
SLEEP: REM vs. Slow Wave Sleep
Relative to sleep, we need to better understand 2 of the 4 stages of sleep: Rapid-eye-movement (REM) and Slow-Wave Sleep, also known as deep sleep. The two stages occur alternatively with marked changes in the brain waves. The characteristics of deep sleep as seen on an EEG are high amplitude and low frequency brain waves and deep sleep tends to occur more towards the beginning of the night. Dreaming in this stage is rare, and if dreaming does occur, it is usually forgotten once you wake up.
REM sleep, on the other hand, predominates in the second half of the night as the body becomes more and more rested. True to its name, REM sleep is characterized by muscles twitches and eye movements as well as vivid dreaming. Brain waves on the EEG during REM sleep show low amplitude, high frequency waves.
MEMORY: Declarative vs. Non-Declarative
Long-term memory is broadly categorized in two forms: Declarative and non-Declarative. One basic difference between the two forms is whether or not the hippocampus is involveda part of the brain’s limbic system) is involved or not.  Declarative memories encompass those that can be easily recalled and consist of the knowledge of facts and events, involving visual and verbal input. Declarative memory itself is divided into semantic memories, the knowledge of facts and world events, and episodic memories that store more personal, autobiographical information. Neuronal circuits in the hippocampus are an integral part in the formation of declarative memories.
Non-declarative memories, also sometimes referred to as procedural memories, are those that store a person’s memory of a skill.  This includes all types of ‘how to do’ memories such as cooking a particular dish or playing the piano. Unlike the former type, non-declarative memory does not involve the active participation of brain cells in the hippocampus; instead, motor areas in the frontal cortex are involved.
Memory Processing During Sleep
The process of memory formation isn’t as simple as it might seem. While a lot is still unknown about how memories are truly processed in our brains, we do know the process takes place in three core stages: Acquisition, Consolidation and Recall. 
The introduction of a particular memory in the brain is known as acquisition. The consolidation stage occurs after the memory has been introduced when it gets further sorted and stored (or consolidated). Finally, the recall process is simply recalling or remembering a stored memory.
Clinical experiments on rats and humans have demonstrated a possible relation between sleep and the consolidation of memories. Acquisition and recall, on the other hand, take place when the person is wide awake. It is hypothesized that one you fall asleep, the acquired memories become consolidated and stored in their final destination. Not all memories are stored in the same area of the brain. According to Dr. Robert Stickgold of the Sleep Department at Harvard, the memory of what you ate for breakfast yesterday is not stored in the same area of the brain where the memory of what your favorite breakfast is stored. It is when you fall asleep that these memories are sorted into their respective places. 
A primary question relative to sleep and memory is during which stage of sleep are memories actively processed. Although a definitive pathway has not been elucidated, studies have suggested a relationship between consolidation of memories (especially the non-declarative type of memory) and REM sleep.
In a recent research study, subjects who were asked to learn a foreign language demonstrated increased periods of REM sleep during the night.  As far as declarative memories were concerned, none of the studies could prove the connection between verbal/visual memories and REM sleep.
This led to the hypothesis that perhaps Slow Wave Sleep had some role in the consolidation of memory, particularly the declarative type. Research is still scarce concerning this theory and the studies that have been conducted show inconsistent findings.
Effects of Sleep Deprivation on Memory
The effect of sleep deprivation on an individual’s memory is a topic that has been explored extensively. Many studies have been conducted where subjects were kept awake for over 35 hours to test the effect sleep deprivation had on their long-term memory. Results showed that a 24-hour sleep deprivation period did not have a significant effect on memory recall. However, a 35-hour sleep deprivation period results in impaired facial recognition (a type of episodic memory), recall and verbal memory. 
Although a relationship was established between sleep deprivation and memory through these studies, we still do not know if it was sleep deprivation that directly affected the neuronal circuitry involved in memory consolidation, or if the effects were more metabolic.
As pointed out in a post in Harvard Health Publications, the effects of too little sleep on memory impairment could be due to other known harmful effects of sleep deprivation on the heart and circulation. Sleep deprived patients usually have a consistent high blood pressure that could directly affect brain cells that consolidate memory. 
Improving Memory with Sleep
Several researchers have hypothesized that obtaining the recommended hours of sleep can benefit the individual’s memory. To test this hypothesis, a study was conducted on a group of twenty female and twenty male adolescents, between 10 and 14 years. The group was divided into two – a sleep group, and a non-sleep group. All subjects were given the paired-associate test, a standard for testing declarative memory. The paired-associate test consists of remembering two related (tree/leaf) and two unrelated (tree/shoe) words. In addition, the two groups were given the letter-number test which consists of sequencing a list of mixed numbers and letter in an ascending order. The sleep group was given the task at 9 pm and was tested at 9 am after a night of sleep. The non-sleep group was given the task at 9 am and tested at 9 pm at night with continuation of normal day activities and without naps. The paired-associate test did not result in any significant differences. However, utilizing the letter-number test, there was a 20.6% increase in long term memory in the sleep group showed versus the non-sleep group. 
Even though the direct effect or mechanism of sleep on memory is still being studied, it is clear that improves cognition and refreshes the body. Therefore, a good night’s sleep is essential for optimal functioning through the day. Obtaining 7-8 hours of sleep nightly at a consistent time along with proper diet and exercise can greatly contribute to a great night’s sleep.
- Rasch, Björn, and Jan Born. “About Sleep’s Role in Memory.” Physiological Reviews. American Physiological Society, Apr. 2013.
- Alhola, Paula, and Päivi Polo-Kantola. “Sleep deprivation: Impact on cognitive performance.” Neuropsychiatric Disease and Treatment. Dove Medical Press, Oct. 2007.
- “Sleep, Learning, and Memory.” Sleep, Learning, and Memory | Healthy Sleep. N.p., n.d.
- LeWine, M.D. Howard. “Too little sleep, and too much, affect memory.” Harvard Health Blog. N.p., 29 Oct. 2015.
- Potkin, Katya Trudeau, and William E. Bunney. “Sleep Improves Memory: The Effect of Sleep on Long Term Memory in Early Adolescence.” PLoS ONE. Public Library of Science, 2012.