EEG source localization is an essential tool to reveal the cortical sources underlying brain oscillatory activity. We applied LORETA, a technique of EEG source localization, to identify the principal brain areas involved in the process of falling asleep (sleep onset, SO). We localized the contributing brain areas of activity in the classical frequency bands and tracked their temporal evolution (in 2-min intervals from 2 min prior to SO up to 10 min after SO) during a baseline night and subsequent recovery sleep after total sleep deprivation of 40 h. Delta activity (0.5-5 Hz) gradually increased both in baseline and recovery sleep, starting in frontal areas and finally involving the entire cortex. This increase was steeper in the recovery condition. The evolution of sigma activity (12-16 Hz) resembled an inverted U-shape in both conditions and the activity was most salient in the parietal cortex. In recovery, sigma activity reached its maximum faster than in baseline, but attained lower levels. Theta activity (5-8 Hz) increased with time in large parts of the occipital lobe (baseline and recovery) and in recovery involved additionally frontal areas. Changes in alpha activity (8-12 Hz) at sleep onset involved large areas of the cortex, whereas activity in the beta range (16-24 Hz) was restricted to small cortical areas. The dynamics in recovery could be considered as a "fast-forward version" of the one in baseline. Our results confirm that the process of falling asleep is neither spatially nor temporally a uniform process and that different brain areas might be falling asleep at a different speed potentially reflecting use dependent aspects of sleep regulation.