The Agency for Healthcare Research and Quality (AHRQ) recently released an evaluation of melatonin. Here is a summary:
Evidence suggests that melatonin is not effective in treating most primary sleep disorders with short-term use, although there is some evidence to suggest that melatonin is effective in treating delayed sleep phase syndrome with short-term use.
Evidence suggests that melatonin is not effective in treating most secondary sleep disorders with short-term use.
No evidence suggests that melatonin is effective in alleviating the sleep disturbance aspect of jet lag and shiftwork disorder.
Evidence suggests that melatonin is safe with short-term use.
Evidence suggests that exogenous melatonin has a short half-life and it penetrates the blood-brain-barrier.
Evidence suggests a link between endogenous melatonin and the sleep cycle.
Evidence suggests a link between endogenous melatonin and the temperature rhythm.
I agree with the AHRQ report that melatonin is not an effective hypnotic (it will not help a typical insomniac fall asleep). I do think, however, that the report was too negative on melatonin's effectiveness in treating circadian rhythm disorders. For example, there are a few studies in which melatonin was effective in treating jet lag. Although melatonin does not directly induce sleep, if given at the proper time and dose, it can reset a person's (near) 24-hour biological clock.
There are 2 major difficulties in evaluating the effectiveness of melatonin for a particular condition: 1) There is no standard formulation of melatonin and its dose varies from study to study and 2) the timing of administration is critical and varies from study to study.
A good example of the difficulties of using melatonin is delayed sleep phase syndrome. In this disorder, a person has a biological tendency to fall asleep late and wake up late; a typical patient may sleep from 3 am to 11 am. If he is allowed to keep this sleep schedule, he will do fine. He will have a great deal of difficulty if he tries to fall asleep earlier. If he is forced to get up earlier (to go to school or work) he will probably be sleepy during the day and have trouble functioning. One way of treating this disorder is resetting the biological clock so that the patient can sleep at normal times. The biological clock can be advance by either exposing the patient to bright light (either sun light or a light box) in the morning or by giving melatonin in the evening. However, if you miss the critical window of light/melatonin administation by as little as 60 minutes it will have little effectiveness. If you miss it by more than that, it may have the opposite effect (causing the person to fall asleep later).
More research is needed in the use of melatonin in treating circadian rhythm disorders (disorders of the biological clock). Melatonin is unlikely to be effective if a patient buys a random dose at a vitamin store and takes it when they feel like taking it. It may be helpful for certain circadian rhythm disorders if taken under the supervision of a knowledgable sleep specialist.