Sensory perception, being aware of external stimuli, depends highly on brain state. Decreased responsiveness to sensory stimuli during sleep is thought to be mediated via a thalamic gate; however, olfactory information can gain access to olfactory cortices without an obligatory thalamic relay. It remains unknown how the olfactory system processes information flow in different brain states. Here we simultaneously recorded local field potentials (LFPs) in hierarchical olfactory regions: olfactory bulb (OB), anterior piriform cortex (APC), and orbitofrontal cortex (OFC). To ensure consistent peripheral input across states in freely behaving mice, optogenetic activation of olfactory sensory neurons was used. Surprisingly, evoked LFPs in sleep states (both NREM and REM) were larger and contained greater gamma band power and stronger cross-region coherence than in wake. Single-unit recordings from the OB and APC revealed a higher percentage of responsive neurons during NREM sleep. Quantitative analysis of nasal breathing confirmed slower respiration rates and shallower inhalation slopes during sleep. In addition to how sleep impacts olfactory processing, we examined if the loss of olfactory sensory neurons impacted sleep architecture and respiration using in vivo electrophysiology. We recorded and analyzed sleep and respiration patterns during two- or four-hour periods before and after treatment with methimazole, which destroys the olfactory epithelium. We did not find a significant impact of methimazole treatment on sleep or respiration; however, this may be due to the limited nature of the study. The implications of these findings on state-dependent olfactory processing are discussed.