Hypocretin deficient narcolepsy (type 1, NT1) presents with multiple sleep abnormalities including sleep onset rapid eye movement (REM) periods (SOREMPs) and sleep fragmentation. We hypothesized that cortical arousals, as scored by an automatic detector, are elevated in NT1 and narcolepsy type 2 (NT2) patients as compared to control subjects. We analyzed nocturnal polysomnography (PSG) recordings from 25 NT1 patients, 20 NT2 patients, 18 clinical control subjects (CC, suspected central hypersomnia but with normal cerebrospinal (CSF) fluid hypocretin-1 (hcrt-1) levels and normal results on the multiple sleep latency test), and 37 healthy control (HC) subjects. Arousals were automatically scored using Multimodal Arousal Detector (MAD), a previously validated automatic wakefulness and arousal detector. Multiple linear regressions were used to compare arousal index (ArI) distributions across groups. Comparisons were corrected for age, sex, body-mass index, medication, apnea-hypopnea index, periodic leg movement index, and comorbid rapid eye movement sleep behavior disorder. NT1 was associated with an average increase in ArI of 4.02 events/hour (p = 0.0246) compared to HC and CC, while no difference was found between NT2 and control groups. Additionally, a low CSF hcrt-1 level was predictive of increased ArI in all the CC, NT2, and NT1 groups. The results further support the hypothesis that a loss of hypocretin neurons causes fragmented sleep, which can be measured as an increased ArI as scored by the MAD.