Background and Objective The precise pathophysiology of cognitive impedance and mental illness in obstructive sleep apnea (OSA) patients remains elusive. Therefore, there is a need for studies on novel diagnoses and therapeutic strategies for cognitive impairment in OSA patients. This work aimed to evaluate cerebral hypoxemia, its consequences on brain metabolism, and local and systemic inflammation, and their subsequent impact on cognitive and psychological functioning.Methods This cross-sectional case-control study was conducted on 30 eligible OSA patients and 20 age/sex-matched healthy controls. All the participants underwent one-night polysomnography, and cognitive evaluation was done using the Mini-Mental State Examination, Montreal Cognitive Assessment, Brief Kingston Standardized Cognitive Assessment, D2 Test of Consideration (to evaluate attention problems), and Wisconsin card sorting test. The psychiatric assessment included the Arabic form of the Hamilton Depression Rating Scale and Beck Depression Inventory-II. A radiology assessment was done using proton magnetic resonance spectroscopy. Neurophysiological assessment was done using the potential cortical (N20) latency and amplitude of somatosensory evoked potential. Laboratory examinations included serum levels of NF-κB, HMGB1, and HIF-1α.Results Polysomnography demonstrated noteworthy increase in the apnea-hypopnea index, respiratory disturbance index, arousal index, snoring index, and wake after sleep onset. It also showed diminished sleep efficiency, total sleep time, and SaO2 nadir in the OSA group. Neuropsychological scales demonstrated poor performance in global cognitive tests, particular cognitive domains impedance, and depression in the OSA group, with noteworthy differences within the group. Magnetic resonance spectroscopy highlighted that OSA patients had a noteworthy bilateral decrement in N-acetylaspartate (NAA) peak, creatine peak, and NAA/choline proportion and an increment in choline peak, lipid peak, lactate peak, choline/creatine proportion, and NAA/creatine proportion in the frontal white matter, hippocampus, and parieto-occipital cortex. Moreover. OSA patients had either missing or decreased amplitude and delayed latency of N20. There was a noteworthy rise of serum inflammatory marker NF-κB, HMGB1, and oxidative stress marker HIF-1α in OSA patients.Conclusions Chronic intermittent hypoxia with resulting amplified inflammatory and oxidative stress in OSA patients may affect brain metabolism; consequently, leading to cognitive and psychological dysfunctions.