Background: Poor sleep is known to adversely affect hospital patients' recovery and rehabilitation. The aim of the study was to investigate the perceived duration and quality of patient sleep and identify any environmental factors associated with patient-reported poor sleep in hospital. Method: A cross-sectional study was conducted involving 15 clinical units within a 672-bed tertiary-referral hospital in Australia. Semi-structured interviews to determine perceptions of sleep quantity and quality and factors that disturb nocturnal sleep were conducted with patients and nursing staff. Environmental noise, light and temperature were monitored overnight, with concurrent logging of noise sources by observers. Results: Patients reported a mean reduction in hospital sleep duration, compared to home, of 1.8 h (5.3 vs. 7.1 h; p < 0.001). The proportions of patients reporting their sleep quality to be poor/very poor, fair and of good quality were 41.6, 34.2 and 24.2% respectively. Patients reported poorer sleep quality than nurses (p < 0.05). Patients, nurses and observers all reported the main factors associated with poor sleep as clinical care interventions (34.3%) and environmental noise (32.1%). Noise levels in all 15 clinical areas exceeded WHO recommended levels of < 30 dB [A] by 36.7 to 82.6%, with peak noise levels of 51.3 to 103.3 dB (A). Conclusion: Hospital in-patients are exposed to factors which reduce the duration and quality of their sleep. These extrinsic factors are potentially modifiable through behaviour change and reconfiguration of the clinical environment. The findings from this study provided the foundation for a quality improvement project currently underway to improve patients' sleep.