A Pokémon with this Ability will wake up if it is asleep in battle (such as if it gains the Ability outside of battle or by an effect like Skill Swap, or is put to sleep by a Pokémon with an Ability like Mold Breaker). If the Pokémon with this Ability is asleep and is holding a Chesto or Lum Berry, Insomnia will cure the Pokémon of sleep before the Berry has a chance to be consumed.
Yes, if Mewtwo mega evolves into Mega Mewtwo Y, it will wake up if it is asleep.
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