Study Objectives: Objective sleep impairments in insomnia disorder (ID) are insufficiently understood. The present study evaluated whether whole-night sleep stage dynamics derived from polysomnography (PSG) differ between people with ID and matched controls and whether sleep stage dynamic features discriminate them better than conventional sleep parameters. Methods: Eighty-eight participants aged 21-70 years, including 46 with ID and 42 age- and sex-matched controls without sleep complaints, were recruited through www.sleepregistry.nl and completed two nights of laboratory PSG. Data of 100 people with ID and 100 age- and sex-matched controls from a previously reported study were used to validate the generalizability of findings. The second night was used to obtain, in addition to conventional sleep parameters, probabilities of transitions between stages and bout duration distributions of each stage. Group differences were evaluated with nonparametric tests. Results: People with ID showed higher empirical probabilities to transition from stage N2 to the lighter sleep stage N1 or wakefulness and a faster decaying stage N2 bout survival function. The increased transition probability from stage N2 to stage N1 discriminated people with ID better than any of their deviations in conventional sleep parameters, including less total sleep time, less sleep efficiency, more stage N1, and more wake after sleep onset. Moreover, adding this transition probability significantly improved the discriminating power of a multiple logistic regression model based on conventional sleep parameters. Conclusions: Quantification of sleep stage dynamics revealed a particular vulnerability of stage N2 in insomnia. The feature characterizes insomnia better than - and independently of - any conventional sleep parameter.