To examine whether insomnia is associated with spectral electroencephalographic (EEG) dynamics in the beta (15–35Hz) range during sleep in an adolescent general population sample. A case-control sample of 44 adolescents from the Penn State Child Cohort underwent a 9-h polysomnography, clinical history and physical examination. We examined low-beta (15–25 Hz) and high-beta (25–35 Hz) relative power at central EEG derivations during sleep onset latency (SOL), sleep onset (SO), non-rapid eye movement (NREM) sleep, and wake after sleep onset (WASO). Compared to controls (n = 21), individuals with insomnia (n = 23) showed increased SOL and WASO and decreased sleep duration and efficiency, while no differences in sleep architecture were found. Insomniacs showed increased low-beta and high-beta relative power during SOL, SO, and NREM sleep as compared to controls. High-beta relative power was greater during all sleep and wake states in insomniacs with short sleep duration as compared to individuals with insomnia with normal sleep duration. Adolescent insomnia is associated with increased beta EEG power during sleep, which suggests that cortical hyperarousal is present in individuals with insomnia as early as adolescence. Interestingly, cortical hyperarousal is greatest in individuals with insomnia with short sleep duration and may explain the sleep complaints of those with normal sleep duration. Disturbed cortical networks may be a shared mechanism putting individuals with insomnia at risk of psychiatric disorders. This is the first study to show that adolescents who complain of insomnia have increased fast frequencies in the electroencephalogram while trying to fall asleep or while asleep. Beta frequencies are regarded as a marker of cortical arousal and this study showed that they were elevated in adolescent insomniacs with normal sleep duration and highest in those with short sleep duration. Thus, even when asleep, the brain of adolescents with insomnia continues to process information and remains more alert than that of good sleepers. This is an important finding because this type of brain activation has been found in individuals with psychiatric disorders, insomnia usually precedes the onset of such disorders, and adolescence is a critical developmental period.