How do our brains monitor the environment during sleep? Traditional views consider sleep a disconnected state. Yet, neural processing of sensory information persists, albeit resulting in different perceptual experiences compared to wakefulness. Here, we investigated the neural temporal lobe circuits underlying auditory processing during wake and sleep and how sleep physiology affects the processing of auditory stimuli. This was accomplished through the investigation of intracranial electrophysiological responses to pure-tone auditory stimulation (Panel A) in 18 neurosurgical patients with medically refractory epilepsy. We employed principal component analyses (PCA) on normalized intracranial event-related potentials (iERPs; Panel B). In wakefulness, auditory responses exhibit an early component, with contributing electrodes peaking ~105 ms post-stimulus onset, localized in lateral electrodes, and followed by a later medial component, peaking at ~241 ms. Similarly, auditory responses in wakefulness exhibit spatiotemporal specificity (Panel C, left; R2Conditional=.42, slope=3.14, pcorr=0.0009), evident by increased response peak latencies further from primary auditory cortex (A1). During non-rapid eye movement sleep (NREM), this hierarchy weakened: The PCA analysis revealed no spatial specificity (Panel D), and the regression showed no relationship between response peak latency and distance to A1 (Panel C, right; R2C=.382, slope=0.29, pcorr=1). Within NREM sleep, iERPs were modulated by the phase of slow oscillations in the lateral (Panel E) and medial temporal lobe. The effect of auditory stimulation was greatest in the peaking to waning phase (Panel F). We show the awake auditory network is largely preserved during sleep, but that auditory processing loses temporal specificity and is modulated by sleep oscillations.​