Somatostatin/allatostatin C signaling regulates sleep, metabolism, memory, and longevity, but the underlying neuronal mechanisms remain unclear. We investigated the Caenorhabditis elegans somatostatin/allatostatin C ortholog NLP-99 and its receptor NPR-16. We found that the wake-active AIY neurons release NLP-99 to activate NPR-16. NPR-16 is G_i/o coupled and acts cell nonautonomously to activate the sleep-active RIS neuron while acting autonomously in RIS to inhibit calcium activation and the release of the sleep-inducing FLP-11 neuropeptides. During larval arrest, strong NPR-16 expression in RIS causes NLP-99/NPR-16 signaling to inhibit sleep, reducing lipid storage and survival. In well-fed adults, NPR-16 expression is stronger outside of RIS, and NLP-99/NPR-16 signaling is required for RIS activation and sleep while also inhibiting longevity via RIS. Both NLP-99/NPR-16 and RIS/FLP-11 are required for memory consolidation. These results show that NLP-99/NPR-16 regulates physiological processes via control of RIS. A similar somatostatin-mediated regulation of sleep neurons may underlie physiological regulation in other species.