Background: The relationship between alopecia areata (AA) and sleep disorders remains uncertain. This study aims to investigate the bidirectional association between AA and sleep disorders. Methods: To assess the risk of developing sleep disorders, we recruited 5648 patients with AA and 22,592 matched controls from the National Health Insurance Research Database (NHIRD) in Taiwan. Similarly, risk of developing AA was assessed in 93,130 patients with sleep disorders (including 7310 patients with obstructive sleep apnea [OSA] and 85,820 patients with non-apnea insomnia) and 372,520 matched controls. Cox regression model was used for the analysis. Results: AA patients had a significantly increased risk of developing OSA (adjusted hazard ratio [aHR] 3.80; 95% confidence interval [CI] 2.53–5.71) and non-apnea insomnia (aHR 4.20; 95% CI 3.68–4.79). Conversely, presence of sleep disorders significantly increased the risk of AA development (aHR 4.70; 95% CI 3.99–5.54). Both OSA (aHR 3.89; 95% CI 2.46–6.16) and nonapnea insomnia (aHR 4.77; 95% CI 4.03–5.64) were associated an increased risk of developing AA. Conclusions: Patients with AA have a higher risk of developing sleep disorders compared to controls, and vice versa. Further studies are needed to investigate the shared pathogenic mechanism underlying these two conditions.