Though sleep disturbance constitutes the risk factor for Alzheimer's disease (AD), the underlying mechanism is still unclear. This study aims to explore the interaction between sleep disturbances and AD on brain function. We included 192 normal controls, 111 mild cognitive impairment (MCI), and 30 AD patients, with either poor or normal sleep (PS, NS, respectively). To explore the strength and stability of brain activity, we used static amplitude of low-frequency fluctuation (sALFF) and dynamic ALFF (dALFF) variance. Further, we examined white matter hyperintensities (WMH) and amyloid PET deposition, representing the vascular risk factor and AD-related hallmark, respectively. We observed that sleep disturbance significantly interacted with disease severity, exposing distinct effects on sALFF and dALFF variance. Interestingly, PS groups showed the dALFF variance trajectory of initially increased, then decreased and finally increased along the AD spectrum, while showing the opposite trajectory of sALFF. Further correlation analysis showed that the WMH burden correlates with dALFF variance in PS groups. Conclusively, our study suggested that sleep disturbance interacts with AD severity, expressing as effects of compensatory in MCI and de-compensatory in AD, respectively. Further, vascular impairment might act as important pathogenesis underlying the interaction effect between sleep and AD.