The US space agency will replace the orbiting laboratory's fluorescent bulbs with an array of light-emitting diodes, costing USD 11.2 million, which can switch between blueish, whitish and reddish light depending on the time of day.
The changes can be programmed in by the ground, or by the astronauts and the new light bulbs are due to be swapped in by 2016, 'SPACE.COM' reported.
About half of everyone who flies to space relies on sleep medication to get some rest and according to NASA flight surgeon Smith Johnston, studies showed that hospital staff made more medical errors during the darkest times of the year.
The findings show that people have a day-night cycle that must be respected, even when they're doing the demanding work of space exploration.
"When you have normal light coming through the windows of stores, and schools, and hospitals, people do better. They function better," said Johnston, the lead physician for NASA's wellness programme.
Sleep is no trivial matter in space. Astronauts generally get about six hours of shut-eye in orbit despite being allowed 8.5. Demanding schedules and unusual environments are among the factors that cause insomnia, the website said.
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"The station is noisy, carbon dioxide is high, you don't have a shower, there's a lot of angst because you've got to perform. Imagine if you have a camera on you 24 hours a day," Johnston said.
Sleep deprivation can cause irritation, depression, sickness or mistakes over time. Any of these problems can be dangerous in the close, confined, pressurised quarters of the space station.
Blue light stimulates the human brain best because people evolved to respond to the colour of Earth's sky, experts say. When an astronaut's eyes are exposed to blue light, his or her body suppresses melatonin, a sleep-inducing hormone.
Blue also promotes the formation of melanopsin, a "protein pigment" that keeps people awake.
In simple terms, the colour red reverses the process. Melatonin increases, making the astronaut sleepy, while suppressing melanopsin.
"You can dial in a natural day-night cycle on the space station" with the new light arrays, which are being developed by Boeing, Johnston added.
NASA works with the astronauts to minimise jet lag. Techniques that help crew members, such as wearing sunglasses on the plane and taking medications at a certain time, can then be used in orbit.