Emotion has a lasting effect on memory, encouraging certain aspects of our experiences to become durable parts of our memory stores. Although emotion exerts its influence at every phase of memory, this review focuses on emotion's role in the consolidation and transformation of memories over time. Sleep provides ideal conditions for memory consolidation, and recent research demonstrates that manipulating sleep can shed light on the storage and evolution of emotional memories. We provide evidence that sleep enhances the likelihood that select pieces of an experience are stabilized in memory, leading memory for emotional experiences to home in on the aspects of the experience that are most closely tied to the affective response.