Objectives Negative life events are associated with sleep disturbances. Further understanding of these associations is beneficial as sleep disturbances are common. We assessed the association between two commonly distinguished types of negative life events (dependent vs. independent) and sleep quality. The extent to which genetic and environmental influences explained the association between dependent negative life events and sleep quality was also assessed. Finally, we examined the presence of gene–environment interaction by assessing whether genetic liability to sleep disturbance varied as a function of dependent negative life events. Methods Structural equation modelling was used to perform the statistical analyses on questionnaire data collected from 1556 twin and non-twin siblings. Results Poor sleep quality was more strongly associated with dependent as compared to independent negative life events (r = .34 and .15, respectively). There was substantial overlap in the genetic influences on the association between dependent negative life events and poor sleep quality (rA = .62[.43–.81]), suggesting gene–environment correlation. Environmental overlap was small (rE = .16[.04–.28]). Genetic influences accounted for a large proportion of the association (70%[.47–.92]) with the remaining co-variance due to non-shared environment (30%[.08–.53]). Genetic liability to sleep quality was not moderated by dependent negative life events. Conclusions Genetic and environmental effects on sleep are not necessarily distinct but to some extent work in concert. This should be considered in future studies assessing the genetic and environmental effects on sleep.