Sleep deprivation (SD) leads to impairments in cognitive function. Here, we tested the hypothesis that cognitive changes in the sleep-deprived brain can be explained by information processing within and between large-scale cortical networks. We acquired functional magnetic resonance imaging (fMRI) scans of 20 healthy volunteers during attention and executive tasks following a regular night of sleep, a night of SD, and a recovery nap containing nonrapid eye movement (NREM) sleep. Overall, SD was associated with increased cortex-wide functional integration, driven by a rise of integration within cortical networks. The ratio of within versus between network integration in the cortex increased further in the recovery nap, suggesting that prolonged wakefulness drives the cortex towards a state resembling sleep. This balance of integration and segregation in the sleep-deprived state was tightly associated with deficits in cognitive performance. This was a distinct and better marker of cognitive impairment than conventional indicators of homeostatic sleep pressure, as well as the pronounced thalamocortical connectivity changes that occurs towards falling asleep. Importantly, restoration of the balance between segregation and integration of cortical activity was also related to performance recovery after the nap, demonstrating a bidirectional effect. These results demonstrate that intra- and interindividual differences in cortical network integration and segregation during task performance may play a critical role in vulnerability to cognitive impairment in the sleep-deprived state.