Patients with obstructive sleep apnoea (OSA) experience neuropsychological deficits falling broadly into the four areas of daytime sleepiness, cognitive deficits, reduced driving competence and impaired psychosocial well-being. Case-control studies of daytime function in OSA patients generally indicate moderate to severe daytime sleepiness using polysomnographic or self-rating assessments. Cognitive performance on tests of attention and concentration ability, visuomotor and constructional skills, verbal fluency, planning and problem-solving, memory and executive function may be mildly to moderately impaired. These two symptoms may contribute to a road traffic accident rate in OSA between two and seven times higher than that of normals, and to the high prevalence of minor psychiatric morbidity, and reductions in functional and health status, among patients. The daytime impairments associated with OSA are improved by continuous positive airway pressure (CPAP) therapy, although a lack of complete normalization has been suggested for objective sleepiness and some areas of cognitive function. The severity of sleepiness and cognitive impairments show weak and moderate correlations with frequency of sleep-disordered breathing in clinical and epidemiological studies. Experimental and clinical evidence supports a role for nocturnal physiological events of OSA, arousals and hypoxaemia, in directly or indirectly producing neuropsychological deficits, particularly those of sleepiness and cognitive deterioration.