Waking brain physiology underlying deficits from continuous sleep restriction (CSR) is not well understood. Fourteen good sleepers participated in a 21-day protocol where they slept their usual amount in a baseline week, had their time in bed restricted by 33% in a CSR week, and slept the desired amount in a recovery week. Participants slept at home, completing diaries and wearing activity monitors to verify compliance. Each day participants completed an RT task and mood and sleepiness ratings every 3 h. Laboratory assessment of electrophysiology and performance took place at the end of baseline, three times throughout the CSR week, and at the beginning of recovery. Participants reported less sleep during CSR which was confirmed by activity monitors. Correspondingly, well-being and neurobehavioural performance was impaired. Quantitative EEG analysis revealed significantly reduced arousal between the 1st and 7th days of restriction and linear effects at anterior sites (Fp2, Fz, F8, T8). At posterior sites (P4, P8), reductions occurred only later in the week between the 4th and 7th nights of restriction. Both the immediate linear decline in arousal and precipitous drop later in the week were apparent at central sites (C4, Cz). Thus, frontal regions were affected immediately, while parietal regions showed maintenance of function until restriction was more severe. The P300 ERP component showed evidence of reduced attention by the 7th day of restriction (at Pz, P4). EEG and ERPs deficits were more robust in the right-hemisphere, which may reflect greater vulnerability to sleep loss in the non-dominant hemisphere.