A system and method is disclosed that enables a peripheral or slave device to seamlessly transition in and out of sleep state while remaining completely transparent to host software. When the device is in a sleep mode and incoming data is detected, the device begins a wake-up procedure and data is routed to a first, transitional memory. The size of the transitional memory is selected such that it is capable of buffering data received during time required for the system memory to stabilize from wake-up. Once a second, extended memory is stabilized, the data is buffered from the transitional memory to the extended memory. The device resumes normal operation when its processor has initialized and can read data from the extended memory.