Background: Internet-based cognitive behavioral therapy for insomnia (iCBT-I) provides flexibility but requires significant time and includes potentially challenging components such as sleep restriction therapy. This raises questions about its incremental effectiveness compared to less demanding minimal interventions such as sleep hygiene psychoeducation. Objective: This study aimed to assess the incremental efficacy of self-guided iCBT-I with optional on-demand feedback for university students with insomnia compared to a single session of digital psychoeducation on sleep hygiene. Methods: In a randomized controlled trial, 90 students with insomnia (Insomnia Severity Index ≥10) were randomly allocated to self-help–based iCBT-I (45/90, 50%) or one session of digital sleep hygiene psychoeducation with stimulus control instructions (active control group [aCG]: 45/90, 50%). The self-help–based iCBT-I consisted of 6 sessions on psychoeducation, sleep restriction, and stimulus control, including written feedback on demand from an eCoach. Assessments occurred at baseline (T1), 8 weeks after treatment (T2), and at a 6-month follow-up (T3) via web-based self-assessment and diagnostic telephone interviews. The primary outcome was insomnia severity at T2. Analyses of covariance were conducted in an intention-to-treat sample. Secondary outcomes included diagnoses of insomnia and major depression, sleep quality, sleep efficiency, worrying, recovery experiences, recovery activities, presenteeism, procrastination, cognitive irritation, and recuperation in sleep. Results: There was no difference in insomnia severity at T2 between the iCBT-I group (mean 11.27, SD 5.21) and aCG group (mean 12.36, SD 4.16; F_1,989.03=1.12; P=.29; d=–0.26; 95% CI 0.68 to 0.17). A significant difference emerged at T3 (iCBT-I: mean 9.43, SD 5.36; aCG: mean 12.44, SD 5.39; F_1,426.15=4.72; P=.03), favoring iCBT-I with a medium effect (d=–0.57; 95% CI 1.07 to –0.06). Most secondary outcomes revealed no significant differences between the groups. In total, 51% (23/45) of participants in the iCBT-I group completed all 6 sessions, and 69% (31/45) completed the 4 core sessions. Conclusions: In the short term, students might benefit from low-intensity, easily accessible digital sleep hygiene psychoeducation or iCBT-I. However, it appears that iCBT-I offers superiority over sleep hygiene psychoeducation in the long term.