While mechanistic studies of transcutaneous auricular vagus nerve stimulation (taVNS) in chronic insomnia (CI) have focused on higher-order cortical and limbic systems, its effects on key nodes in sleep-wake regulatory networks, specifically the lateral hypothalamus (LH), remain poorly understood. To investigate whether taVNS improves CI by modulating the LH functional connectivity (FC) network, and to preliminarily explore the association between baseline FC characteristics and individual treatment response. Seventy CI patients were randomized into real or sham taVNS groups. Whole-brain FC changes were analyzed using the bilateral LH as seed regions. A whole-brain voxel-wise support vector regression (SVR) model with ReliefF feature selection, a fixed training/test split (7:3), and 5,000 permutation tests was built to predict treatment response (ΔPSQI) within the real taVNS group. Compared with the sham taVNS, the real taVNS produced greater reductions in PSQI, ISI, and SAS scores. Neuroimaging analysis revealed that real taVNS enhanced FC between the left LH and both the right cerebellar Crus2 and the right precuneus, and decreased FC between the left LH and both the left insula and the left orbital frontal cortex. Notably, increased left LH-Crus2 FC correlated with PSQI improvement ( r = -0.473, p = 0.011). In an exploratory whole-brain SVR analysis, the gyrus rectus was the highest-ranked baseline FC feature (test set: r = 0.662, p = 0.0264, P_perm = 0.0142). TaVNS may improve CI through modulation of the LH FC network. Exploratory prediction analysis suggested that the gyrus rectus may carry information relevant to individual symptom improvement. These findings require validation in larger, independent cohorts and do not yet support clinical application. This study was registered with the Chinese Clinical Trial Registry (ChiCTR1900022535) on April 16, 2019. The study was conducted in accordance with the Declaration of Helsinki and was approved by the Ethics Committee of the Second Clinical College of Guangzhou University of Chinese Medicine (No. ZF201900402).
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