Objective To investigate the effect of dexmedetomidine (Dex) on cognitive function in elderly patients with intractable insomnia. Methods Sixty elderly patients with intractable insomnia were divided into 2 groups (30 in each group) according to randon number table method, the propofol group (group P) and the Dex group (group D). Patients were treated with sleeping balance induced by anesthesia. The clinical efficacy, sleep quality scores, cognitive function scores and serum cortisol changes before and after treatment were observed in the two groups. Results Both groups of patients achieved good clinical efficacy. After treatment, the sleep quality scores in both groups were decreased (P<0.05) while the sleep qualities were significantly improved. However, in the patient of the group P, the difference of cognitive function scores between after treatment and before treatment were not statistically significant (P>0.05), whereas the cognitive function score of the group D was significantly improved after treatment (P<0.05). Regards to the serum cortisol level, the difference between after treatment and before treatment was not statistically significant in the group P (P>0.05), whereas the serum cortisol level of the group D after treatment was significantly lower than that before treatment, the difference was statistically significant (P<0.05). Conclusions Dex can improve the sleep quality and cognitive function of patients with intractable insomnia.