Tip60 is a histone acetyltransferase (HAT) enzyme that epigenetically regulates genes enriched for neuronal functions through interaction with the amyloid precursor protein (APP) intracellular domain. However, whether Tip60-mediated epigenetic dysregulation affects specific neuronal processes in vivo and contributes to neurodegeneration remains unclear. Here, we show that Tip60 HAT activity mediates axonal growth of the Drosophila pacemaker cells, termed "small ventrolateral neurons" (sLNvs), and their production of the neuropeptide pigment-dispersing factor (PDF) that functions to stabilize Drosophila sleep-wake cycles. Using genetic approaches, we show that loss of Tip60 HAT activity in the presence of the Alzheimer's disease-associated APP affects PDF expression and causes retraction of the sLNv synaptic arbor required for presynaptic release of PDF. Functional consequence of these effects is evidenced by disruption of the sleep-wake cycle in these flies. Notably, overexpression of Tip60 in conjunction with APP rescues these sleep-wake disturbances by inducing overelaboration of the sLNv synaptic terminals and increasing PDF levels, supporting a neuroprotective role for dTip60 in sLNv growth and function under APP-induced neurodegenerative conditions. Our findings reveal a novel mechanism for Tip60 mediated sleep-wake regulation via control of axonal growth and PDF levels within the sLNv-encompassing neural network and provide insight into epigenetic-based regulation of sleep disturbances observed in neurodegenerative diseases like Alzheimer's disease.