A method and device are disclosed from the perspective of a first device. In one embodiment, the method includes the first device being configured with a Sidelink (SL) Discontinuous Reception (DRX) configuration. The method also includes the first device performing a sidelink communication with a second device. The method further includes the first device receiving a signaling, from the second device, indicating a new sidelink transmission. In addition, the method includes the first device determining whether to start or restart a timer in response to the signaling at least based on information indicated in the signaling, wherein the first device monitors sidelink control channel when the timer is running.