Physical activity (PA) is suggested as an easily accessible adjunctive lifestyle intervention for insomnia. It is not clear if PA is equally beneficial across different levels of insomnia severity. The current study examined the relationship between daily PA (steps) and sleep (duration, efficiency, and quality) across the spectrum of insomnia severity. Multilevel models estimated day-to-night relationships between PA and sleep, and if insomnia severity moderated these relationships. Days with greater PA were associated with nights with longer sleep duration. This was moderated by insomnia severity; PA was associated with longer sleep that night in participants with mild insomnia and associated with less sleep in those with severe insomnia. PA was not associated with sleep efficiency or quality. PA is potentially an easily accessible and impactful intervention to promote sleep duration in participants who are experiencing less severe sleep disturbance. More complex, resource-intensive interventions may be needed as insomnia severity increases.