Background Auditory binaural beat (BB) stimulation is known to modulate electroencephalographic activity by brain entrainment, but few studies have established whether BB can affect the sleep state. We examined the effect of θ BB in improving sleep disturbances and daytime alertness. Methods We conducted double-blind and sham-controlled randomized trial. Subjects with subclinical insomnia were randomly assigned and listened to music for 2 weeks with or without θ BB for 30 minutes before going to sleep. Results There were 43 participants (32 female; mean age, 34.3 ± 10.4 years) who finished the trial. The insomnia severity decreased at 2 weeks in both groups without significant differences in Insomnia Severity Index score (4.41 ± 4.32 vs 2.71 ± 4.66, P = 0.656), although the effect was much stronger for the music with the BB group than for the music-only group (Cohen d = 1.02 vs 0.58). In awake electroencephalographic analysis, the relative β power after 2 weeks was higher in the music with the BB group than in the music-only group (0.2 ± 7.02 vs-3.91 ± 6.97, P = 0.041). Conclusions Auditory θ BB with music does not induce evident improvement of sleep disturbances more than does pure music, but could alter brain activity toward increasing daytime alertness in subclinical insomnia, which needs to be corroborated in a clinical population.