Background Cannabidiol has been shown to be effective in seizure reduction in patients with Dravet syndrome, Lennox-Gastaut syndrome, and tuberous sclerosis. However, very little is known about its potential to reduce interictal epileptiform activity and improve sleep architecture. Objective The objective of this prospective study was to evaluate the influence of cannabidiol therapy on the frequency of interictal epileptiform discharges (IEDs) and sleep microstructure in a cohort of children with drug-resistant epilepsy. Methods Children with drug-resistant epilepsy were prospectively followed from November 2019 to January 2021 during an open-label trial of cannabidiol at a dose of 20 mg/kg/day (to a maximum of 50 mg/kg/day) and stable concomitant medication. Electroencephalograms were recorded at baseline (T0) and after 3 months (T1). Two independent raters, blinded to clinical outcome, evaluated 5-min segments of sleep stage 2 or low-noise awake state. IEDs were visually identified and rates per minute calculated. Sleep microstructure was considered improved if sleep structures were seen at T1 that were not present at T0. IED rates at T0 and T1 were compared and correlated with seizure outcome, cannabidiol dose, initial IED rate, and disease duration. Results In total, 35 children (mean ± standard deviation age 10.1 ± 0.86) were included. The IED rate at T1 was significantly lower than at T0 (19.6 ± 19.5 vs. 36.8 ± 27.2, respectively; p < 0.0001). We found a moderate correlation between IED reduction and percentage of seizure reduction compared with baseline (Pearson's r = 0.39; p = 0.02), a moderate negative correlation between IED reduction and IED rate at T0 (r = − 0.34; p = 0.04), and a trend towards a moderate negative correlation between IED reduction and disease duration (r = − 0.32; p = 0.06). Sleep was recorded in 23 patients. Sleep microstructure was initially abnormal in 56.5% of sleep recordings and improved in 84.6% of those cases. Conclusion Our results strongly suggest the utility of cannabidiol in reducing IEDs and improving sleep microstructure in children with drug-resistant epilepsy. Larger controlled studies are needed to evaluate the clinical relevance of this effect in different epilepsy types.