To investigate the effects of dexmedetomidine on renal function, inflammatory markers, and cognitive outcome, and to identify factors influencing early postoperative cognitive dysfunction (POCD) in elderly patients undergoing hip replacement surgery. A retrospective analysis was conducted on 162 elderly patients who underwent hip replacement surgery at Cangzhou Central Hospital from March 2022 to May 2023. Patients were divided into a control group (without dexmedetomidine) and an experimental group (with dexmedetomidine). Measurements included creatinine (Cr), blood urea nitrogen (BUN), interleukin 1β (IL-1β), tumor necrosis factor alpha (TNF-α), interleukin 6 (IL-6), Montreal Cognitive Assessment (MoCA) score, and the incidence of POCD seven days postoperatively. Univariate and logistic regression analyses were employed to investigate the predictors of early POCD. Significant differences were observed between the groups in terms of renal function, inflammatory markers, and cognitive outcome (Cr, BUN, IL-1β, TNF-α, IL-6 and MoCA scores) (all P<0.05). The experimental group showed a significantly lower incidence of POCD at seven days post-surgery (P<0.05). Logistic regression identified having a neuron-specific enolase (NSE) level seven days post-surgery ≥7.0 pg/ml as a risk factor for early POCD (P=0.001, OR=3.987, 95% CI: 1.789-8.886), whereas intraoperative use of dexmedetomidine was a protective factor (P=0.041, OR=0.424, 95% CI: 0.187-0.964). The use of dexmedetomidine in hip replacement surgery can mitigate postoperative renal injury and inflammatory response, enhance cognitive outcome, and significantly reduce the incidence and risk of early POCD in elderly patients.