Brain orexin (hypocretin) neurons are implicated in sleep–wake switching and reward-seeking but their roles in rapid arousal dynamics and reward perception are unclear. Here, cell-specific stimulation, deletion and in vivo recordings revealed strong correlative and causal links between pupil dilation—a quantitative arousal marker—and orexin cell activity. Coding of arousal and reward was distributed across orexin cells, indicating that they specialize in rapid, multiplexed communication of momentary arousal and reward states.