In 1979, Sharon Keenan joined William C. Dement's internationally recognized team at the Stanford University Sleep Disorders Clinic and Research Center. The Stanford team was instrumental in the accumulation of basic science and clinical sleep research, which ignited a rapid rise in awareness of sleep disorders. National and international scholars frequented Stanford to learn from Dement and his colleagues, including such notable figures as Christian Guilleminault, Merrill Mitler, Vincent Zarcone, and Laughton Miles.

It became evident that courses had to be organized in order to manage the increasing demand for information regarding the diagnosis and treatment of sleep disorders.

By 1982, Mary Carskadon, Dement, and Keenan had begun organizing courses for physicians and technologists. Their work culminated in the creation of The Stanford University Sleep Disorders Center Training and Education Program, with Keenan as director.

Keenan was responsible for managing the training for technologists and fellows within the sleep center, as well as organizing a series of two-week courses each year. Keenan remained director until the university closed the program in 1989. At that time, it was practically the lone source of systematic education in sleep medicine. Dement, Guilleminault, and the late German Nino-Murcia encouraged Keenan to keep the program alive.

In 1989, she established an independent program dedicated to education in sleep medicine and clinical polysomnography. Roy Smith, who had also worked with Dement's team, provided invaluable support in the transition out of the university and brought his teaching and technical expertise to what would become The School of Sleep Medicine. Administrative offices were set up in Keenan's garage in Palo Alto, and teaching continued in local hotels and on the Stanford campus through the Summer Conference Office. In 1992, the school first settled on Yale Street in Palo Alto and in 1995 moved to its present location on Sheridan Avenue.

In 1997, SSM incorporated and a year later became a member of the newly formed Stanford University Center of Excellence for the Diagnosis and Treatment of Sleep Disorders.

The SSM faculty comprises renowned physicians, scientists, and technologists. SSM has set a high standard for continuing medical education in sleep medicine and has contributed to the growth of the clinical specialty. As of 2009, there are more than 3400 ABSM-certified sleep medicine specialists, of which many are SSM alumni.