One of the leading health consequences of the pandemic is the prevalence of sleep-related issues, such as insomnia. Hence, this study highlights the relationship between COVID-19 and insomnia and how insomnia is increasing due to the pandemic. The study's findings summarise that the COVID-19 pandemic has produced ubiquitous mental challenges, including loneliness, anxiety, fear, stress, extreme tiredness, and health concerns. It is also associated with physical issues such as social isolation, juggling work or study, parenting challenges, and significant behavior changes stemming from mass home confinement. There are also economic hardships, financial insecurity, risk, and infection. These factors lead to undoing routines and broken circadian rhythms amid the pandemic, affecting three sleep regulatory processes of the homeostatic sleep drive, the circadian rhythm, and the arousal system. Furthermore, we suggest future research directions to explore (1) long-term health impacts of the pandemic, (2) therapeutic strategies and the implementation of social policies to support people with sleep difficulties, (3) prevention programs and clinical interventions, and (4) nationwide or cross-regional online and practical psychological and sleep management intervention systems and platforms to address the psychological strain of isolation and traumatic experiences of the pandemic.