Sleep reactivity is a predisposition to sleep disturbance during environmental perturbations, pharmacological challenges, or stressful life events. Consequently, individuals with highly reactive sleep systems are prone to insomnia disorder after a stressor, engendering risk of psychopathology and potentially impeding recovery from traumatic stress. Thus, there is tremendous value in ameliorating sleep reactivity to foster a sleep system that is robust to stress exposure, ultimately preventing insomnia and its downstream consequences. We reviewed prospective evidence for sleep reactivity as a predisposition to insomnia since our last review on the topic in 2017. We also reviewed studies investigating pre-trauma sleep reactivity as a predictor of adverse post-traumatic sequelae, and clinical trials that reported the effect of behavioural treatments for insomnia on mitigating sleep reactivity. Most studies measured sleep reactivity via self-report using the Ford Insomnia Response to Stress Test (FIRST), demonstrating high scores on this scale reliably indicate a sleep system with a lower capacity to tolerate stress. Nascent evidence suggests elevated sleep reactivity prior to trauma increases the risk of negative posttraumatic outcomes, namely acute stress disorder, depression, and post-traumatic stress disorder. Lastly, sleep reactivity appears most responsive to behavioural insomnia interventions when delivered early during the acute phase of insomnia. Overall, the literature strongly supports sleep reactivity as a premorbid vulnerability to incident acute insomnia disorder when faced with an array of biopsychosocial stressors. The FIRST identifies individuals at risk of insomnia a priori, thereby guiding early interventions toward this vulnerable population to prevent insomnia and promote resilience to adversity.