Mister Sandman

Mister Sandman is a Fallout 3 Perk.

With the Mister Sandman perk, when you’re in Sneak mode, you gain the option to silently kill any human or Ghoul while they’re sleeping. All Mister Sandman kills earn bonus XP - on normal difficulty this amounts to 50XP per kill. Plus a successful kill earns a short jingly fanfare sound.

Mister Sandman is performed in sneak mode and by choosing "Pickpocket" on an unfortunate sleeping victim. Choosing "Pickpocket" pauses the game and brings up a menu with the options to "Murder" or "Pickpocket". A short murder animation follows with the Player looking around and slitting the victim's throat.

Possession of a knife or other bladed weapon is not necessary to perform a Mister Sandman kill, even though the kill animation shows the deed performed with a knife.

Sometimes Mister Sandman victims wake up and cry out before they die, thus alerting nearby characters (such as the group of raiders sleeping in Five Axles Rest Stop) even with 100 Sneak and Stealth Boy. This happens due to the "stealth" flag being removed from the player while the Mister Sandman killing is in process, rendering the player "clearly detectable", even to sleeping characters as they somehow can observe you while you are sneaking. It's Unknown if this can be fixed or avoided. Also, some victims even stand up, move around, and complain before the game decides to kill them, also alerting nearby characters.

Sometimes murdered victims will "speak" when you steal items from nearby ("That's not yours!"), though there appear to be no extra consequences for this. It has also been experienced that the player levitates over the victim and no knife animation will play. This appears to related to wearing the Deathclaw Gauntlet (needs confirmation). Victims waking up and alerting all nearby enemies may or may not be intended.

If you kill an NPC with the "Murder" option with the Contract Killer perk the NPC will not drop an ear with the rest of the loot.

Note
Patch 1.0.0.15 made it so you can no longer use Mister Sandman on children. It just brings up the regular pickpocket dialogue.