Rationale <p>The efficacy of hypnotic drugs for sleep-wake state discrepancy remains unclear.</p> Objective <p>This study evaluated the efficacy of lemborexant in improving sleep-wake state discrepancy in insomnia disorder and its associations with sleep quality and daytime functioning.</p> Methods <p>Twenty-nine participants diagnosed with insomnia disorder were treated with lemborexant for 12 weeks. Objective sleep parameters were measured using a home electroencephalography device, and subjective parameters were obtained from electronic sleep diaries. Sleep-wake state discrepancy indices, including discrepancies of sleep onset latency (disSOL), wake after sleep onset (disWASO), total sleep time (disTST), and sleep efficiency (disSE), were calculated as objective minus subjective sleep parameters. The Pittsburgh Sleep Quality Index (PSQI) and Epworth Sleepiness Scale (ESS) were used to assess sleep quality and daytime sleepiness. Linear mixed-effects models were used for data analysis.</p> Results <p>Both subjective and objective sleep parameters were improved at 12 weeks after lemborexant administration. The disTST decreased significantly at 4 and 12 weeks. The disSOL increased and disSE decreased significantly by 12 weeks. Participants with defined sleep-wake state discrepancy (disTST &gt; 0&#xa0;min) showed greater decreases in these indices, whereas minimal changes were observed in those without. The disWASO did not change significantly among baseline and 4 and 12 weeks. The improvement in disTST demonstrated a significant association with the reduction of ESS scores (<i>p</i> = 0.008), whereas there was no substantial effect on PSQI scores.</p> Conclusions <p>The present findings suggest that lemborexant treatment reduces sleep-wake state discrepancy, which may be associated with improved daytime functioning in patients with insomnia disorder.</p>