Sleep paralysis is a condition characterized by temporary paralysis of the body shortly after waking up (known as hypnopompic paralysis) or, less often, shortly before falling asleep (known as hypnagogic paralysis).
Physiologically, it is closely related to the paralysis that occurs as a natural part of REM (rapid eye movement) sleep, which is known as REM atonia. Sleep paralysis occurs when the brain awakes from a REM state, but the bodily paralysis persists. This leaves the person fully aware, but unable to move. In addition, the state may be accompanied by hypnagogic hallucinations.
More often than not, sleep paralysis is believed by the person affected by it to be no more than a dream. This explains many dream recountings which describe the person lying frozen and unable to move. The hallucinatory element to sleep paralysis makes it even more likely that someone will interpret the experience as a dream, since completely fanciful, or dream-like, objects may appear in the room alongside one's normal vision. Some scientists have proposed this condition as a theory for alien abductions and ghostly encounters.
Sleep paralysis occurs during REM sleep, thus preventing the body from manifesting movements made in the subject's dreams. Very little is known about the physiology of sleep paralysis. However, some have suggested that it may be linked to post-synaptic inhibition of motor neurons in the pons region of the brain. In particular, low levels of melatonin may stop the depolarization current in the nerves, which prevents the stimulation of the muscles, to prevent the body from enacting the dreamt activity (e.g. preventing a sleeper from flailing his legs when dreaming about running).
Several studies have concluded that many or most people will experience sleep paralysis at least once or twice in their lives.
Many people who commonly enter sleep paralysis also suffer from narcolepsy. In African-Americans, panic disorder occurs with sleep paralysis more frequently than in Caucasians.
Some reports read that various factors increase the likelihood of both paralysis and hallucinations. These include: 
During paralysis episodes, patients may be advised to try moving the facial muscles and moving eyes from one side to the other. This may hasten the termination of the attack.
Clonazepam is highly effective in the treatment of sleep paralysis. The initial dose is 0.5 mg at bedtime, while an increase to 1 mg per night might be necessary to maintain potency.
Anecdotal reports indicate SSRIs such as fluoxetine markedly decrease the incidence of sleep paralysis. Several people who have been both on and off SSRIs have reported corresponding decreases and increases in sleep paralysis episodes. Others report no effects at all.
In Hmong culture, sleep paralysis describes an experience called "dab tsog" or "crushing demon" from the compound phrase "dab" (demon) and "tsog" (crush). Often the sufferer claims to be able to see a tiny figure, no larger than a child, sitting on his or her chest. What is alarming is that a vast number of American Hmong, mainly males, have died in their sleep prompting the Centers for Disease Control to create the term "Sudden Unexpected Nocturnal Death Syndrome" or "SUNDS" for short.
In Vietnamese culture, sleep paralysis is referred to as "ma de", meaning "held down by a ghost". Many people in this culture believe that a ghost has entered one's body, causing the paralyzed state.
In Japanese culture, sleep paralysis is referred to as kanashibari (金縛り, literally "bound or fastened in metal," from kane "metal" and shibaru "to bind, to tie, to fasten"). This term is occasionally used by English speaking authors to refer to the phenomenon both in academic papers and in pop psych literature.
In Hungarian folk culture sleep paralysis is called "lidércnyomás" ("lidérc pressing") and can be attributed to a number of supernatural entities like "lidérc" (wraith), "boszorkány" (witch), "tündér" (fairy) or "ördögszerető". The word "boszorkány" itself stems from the Turkish root "bas-", meaning "to press".
Kurdish people call this phenomenon a "mottaka", they believe that some one, in a form of a ghost or perhaps an evil spirit, turns up on top the of the person in the middle of the night and suffocates him/her. Apparently this happens usually when some one has done something bad.
In New Guinea, people refer to this phenomenon as "Suk Ninmyo", believed to originate from sacred trees that use human essence to sustain its life. The trees are said to feed on human essence during night as to not disturb the human's daily life, but sometimes people wake unnaturally during the feeding, resulting in the paralysis.
In Turkey this is called "karabasan" ("The dark presser/assailer"). It is believed that it is a creature which attacks people in their sleep.
In Mexico, it's believed that sleep paralysis is in fact the spirit of a dead person getting on the person and impeding movement, calling this "se me subió el muerto" (the dead person got on me).
In many parts of the Southern United States, the phenomenon is known as a "hag", and the event is said to often be a sign of an approaching tragedy or accident.
Ogun Oru is a traditional explanation for nocturnal disturbances among the Yoruba of Southwest Nigeria; ogun oru (nocturnal warefare) involves an acute night-time disturbance that is culturally attributed to demonic infiltration of the body and psyche during dreaming. Ogun oru is characterized by its occurrence, a female preponderance, the perception of an underlying feud between the sufferer's earthly spouse and a ;spiritual' spouse, and the event of bewitchment through eating while dreaming. The condition is believed to be treatable through Christian prayers or elaborate traditional rituals designed to exorcise the imbibed demonic elements. 
In Zimbabwean Shona culture the word Madzikirira is used to refer something really pressing one down. This mostly refers to the spiritual world in which some spirit--especially an evil one--tries to use its victim for some evil purpose. The people believe that witches can only be people of close relations to be effective, and hence a witches often try to use one's spirit to bewitch one's relatives.
Several studies have shown that African-Americans may be predisposed to isolated sleep paralysis also known as "the witch is riding you," or "the haint is riding you."  In addition, other studies have shown that African-Americans who have frequent episodes of isolated sleep paralysis, i.e., reporting having one or more sleep paralysis episodes per month coined as "sleep paralysis disorder," were predisposed to having panic attacks.  This finding has been replicated by other independent researchers 
Sleep paralysis in literature, art and music
(1605) Miguel de Cervantes makes mention of the phenomenon in Don Quixote when a tavern wench jumps into the bed of the soundly sleeping Sancho Panza, who, started, and feeling a prodigious weight upon him, thought he was labouring under the nightmare.
(1851) There is a particularly fascinating account of sleep paralysis in Herman Melville's novel Moby-Dick. Chapter 4 (The Counterpane) is an account of Ishmael's meditation on an episode of sleep paralysis in the middle of which he could not distinguish the difference between Queequeg's arm and the quilt. Indeed, he could not even distinguish the difference between his own body and his surroundings. He then recalls an earlier episode of sleep paralysis from his childhood, which he determines was the precise moment he discovered the feeling of "otherness" of his own body with respect to his surroundings.
(1936) An account can also be found in Ernest Hemingway's The Snows of Kilimanjaro, in which death approaches and sits upon the narrator's chest so that he cannot breathe.
(1969) The main character in Kingsley Amis' novel The Green Man also suffers from the affliction.
(1975) Maxine Hong Kingston recounts an episode in her book The Woman Warrior where her mother, Brave Orchid, suffers a night of sleep paralysis in the "Haunted Room", in which she claims she battles a "Sitting Ghost".
(2001) The progressive rock band Dredg explores the different aspects of sleep paralysis, on their album El Cielo. The booklet with El Cielo contains letters written by sufferers of sleeping disorders with descriptions of various experiences with or relating to sleep paralysis. Singer Gavin Hayes incorporates and expands upon the material found in the booklet for the lyrics to the album; all of the songs on the album (except the instrumentals) contain snippets of the text in the booklet.
(2006) Experimental band Fear Before the March of Flames talk about the struggles of dealing with constant sleep paralysis on their album "The Always Open Mouth". One of the songs is even called "Drowning the Old Hag".
^ When considered a disease, isolated sleep paralysis is classified as: Diseases Database 12182, MeSH D020188
Friedman, S. & Paradis, C. (2002). Panic disorder in African-Americans: Symptomatology and isolated sleep paralysis. Cult Med Psychiatry. 2002 Jun;26(2):179-98 PMID 12211324
^ J. A. Cheyne. Preventing and Coping with Sleep Paralysis. Retrieved on 17 July, 2006.
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^ lidérc, Magyar Néprajzi Lexikon, Akadémiai Kiadó, Budapest 1977, ISBN
^ boszorkány, Magyar Néprajzi Lexikon, Akadémiai Kiadó, Budapest 1977, ISBN
^ Aina OF, Famuyiwa OO (2007). "Ogun Oru: a traditional explanation for nocturnal neuropsychiatric disturbances among the Yoruba of Southwest Nigeria". Transcultural psychiatry44 (1): 44-54. doi:10.1177/1363461507074968. PMID 17379609.
^ Bell CC, Shakoor B, Thompson B, Dew D, Hughley E, Mays R, Shorter-Gooden K (1984). "Prevalence of isolated sleep paralysis in black subjects". Journal of the National Medical Association76 (5): 501-508. PMID 6737506.
^ Bell CC, Dixie-Bell DD, Thompson B (1986). "Further studies on the prevalence of isolated sleep paralysis in black subjects". Journal of the National Medical Association78 (7): 649-659. PMID 3746934.
^ Paradis CM, Friedman S (2006). "Sleep Paralysis in African Americans with Panic Disorder". Transcultural psychiatry43 (4): 692-694. PMID 15881272.
^ Friedman S, Paradis CM, Hatch M (1994). "Characteristics of African-Americans and white patients with panic disorder and agoraphobia". Hospital and Community Psychiatry45 (8): 798-803. PMID 7982696.
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Sleep Paralysis Information Service
Projective Catalepsy: Out-of-Body Experience & Sleep Paralysis by International Academy of Consciousness
Sleep information and links from Stanford University
Sleep Paralysis and Associated Hypnagogic and Hypnopompic Experiences from University of Waterloo