Belief that the full moon is associated with psychiatric disturbance persists despite 50 years research showing no association. This article traces the historical roots of belief in the power of the moon to cause disorders the mind, especially insanity and epilepsy. Putative mechanisms of lunar action are critiqued. It is proposed that modern findings showing lack of lunar effect can be reconciled with pre-modern beliefs in the moon's power through a mechanism of sleep deprivation. Prior to the advent of modern lighting the moon was a significant source of nocturnal illumination that affected sleep-wake cycle, tending to cause sleep deprivation around the time of full moon. This partial sleep deprivation would have been sufficient to induce mania/hypomania in susceptible bipolar patients and seizures in patients with seizure disorders. The advent of modern lighting attenuated this lunar effect, especially in modern urban areas, where most 20th century studies of lunar effects on the mind have been conducted. The hypothesis presented in this article is open to empirical validation or falsification. Potential tests for the sleep-deprivation hypothesis of lunar action are discussed.