Few studies have investigated waking electrophysiological measures of arousal during sleep restriction. This study examined electroencephalogram (EEG) activity and performance during a 96-hour laboratory protocol where participants slept a baseline night (8 h), were randomly assigned to 3-, 5-, or 8-hour sleep groups for the next two nights sleep restriction (SR1, SR2), and then slept a recovery night (8 h). There were dose-dependent deficits on measures of mood, sleepiness, and reaction time that were apparent during this short-term bout of sleep restriction. The ratio of alpha to theta EEG recorded at rest indicated dose-dependent changes in CNS arousal. At 9:00 hours, both the 3- and 5-hour groups showed EEG slowing (sleepiness) during restriction, with the 3-hour group exhibiting greater deficits. Later in the day at 13:00 hours, the 5-hour group no longer exhibited EEG slowing, but the extent of slowing was more widespread across the scalp for the 3-hour group. High-frequency EEG, a measure of effort, was greater on the mornings following sleep restriction. The 5-hour group had increased beta EEG at central-parietal sites following both nights of restriction, whereas the 3-hour group had increased beta and gamma EEG at occipital regions following the first night only. Short-term sleep restriction leads to deficits in performance as well as EEG slowing that correspond to the amount and duration of sleep loss. High-frequency EEG may be a marker of effort or compensation.