Despite their improved pharmacokinetic profile, the Z-drugs, zolpidem, zopiclone, and zaleplon, have a spectrum of adverse effects comparable to benzodiazepines. This review focuses on the impairment from Z-drugs on cognition, behavior, psychomotor performance, and driving ability. Z-drugs are short-acting GABA agonists that reduce sleep latency without disturbing sleep architecture. Bizarre behavioral effects have prompted warnings on the prescription, dispensation, and use of Z-drugs. Psychomotor impairment, falls, and hip fractures are more likely to occur with Z-drugs that have longer half-lives, that are taken at higher-than-recommended doses and when mixed with other psychoactive substances including alcohol. Zopiclone and higher doses of zolpidem are more likely to cause anterograde amnesia than zaleplon. Z-drugs, especially zolpidem, are associated with complex behaviors such as sleepwalking, sleep-driving, and hallucinations. Patients taking zopiclone and zolpidem have an increased risk of motor vehicle collisions, over double that of unexposed drivers. Driving impairment occurs with zopiclone and higher doses of zolpidem but is unlikely to occur after 4 h post-zaleplon administration. The residual effect of Z-drugs on next-day cognitive and psychomotor performance has significant impact on lifestyle, safety, and occupational considerations, including motor vehicle and machine operation. The risk-benefit analysis of Z-drugs in the treatment of insomnia, particularly in the elderly, may not favor treatment due to the increased risks of falls and motor vehicle collisions. Prescribers should warn patients taking Z-drugs of minimum time thresholds before they operate machinery or drive motor vehicles.