Orexins (also called hypocretins) are hypothalamic neuropeptides that carry out essential functions in the central nervous system; however, little is known about their release and range of action in vivo owing to the limited resolution of current detection technologies. Here we developed a genetically encoded orexin sensor (OxLight1) based on the engineering of circularly permutated green fluorescent protein into the human type-2 orexin receptor. In mice OxLight1 detects optogenetically evoked release of endogenous orexins in vivo with high sensitivity. Photometry recordings of OxLight1 in mice show rapid orexin release associated with spontaneous running behavior, acute stress and sleep-to-wake transitions in different brain areas. Moreover, two-photon imaging of OxLight1 reveals orexin release in layer 2/3 of the mouse somatosensory cortex during emergence from anesthesia. Thus, OxLight1 enables sensitive and direct optical detection of orexin neuropeptides with high spatiotemporal resolution in living animals.