Formal:
* Ils sont fatigués. (This is the most literal translation and means "they are tired," but it can also convey sleepiness.)
* Ils ont sommeil. (This literally means "they have sleep" and is more specifically about feeling sleepy.)
Informal:
* Ils ont le sommeil. (This is a more informal way of saying "they have sleep" and is also specifically about feeling sleepy.)
* Ils sont crevés. (This means "they are dead tired" and is very informal.)
For children:
* Ils ont envie de dormir. (This means "they want to sleep" and is good for talking about children who are sleepy.)
The best choice will depend on the specific context and your level of formality.