Complementary and Alternative medicine is known to have health benefits. Yoga nidra practice is an easy-to-do practice and has shown beneficial effects on stress reduction and is found to improve sleep in insomnia patients. Effect of yoga nidra practice on subjective sleep is known but its effect on sleep and cognition objectively is not documented. The aim of the study was to study the effect of yoga nidra practice on cognition and sleep using objective parameters. 41 participants were enrolled, and baseline sleep diary (SD) collected. Participants volunteered for overnight polysomnography (PSG) and cognition testing battery (CTB) comprising of Motor praxis test, emotion recognition task (ERT), digital symbol substitution task, visual object learning task (VOLT), abstract matching (AIM), line orientation task, matrix reasoning task, fractal-2-back test (NBACK), psychomotor vigilance task and balloon analog risk task. Baseline CTB and after one and two weeks of practice was compared. Power spectra density for EEG at central, frontal, and occipital locations during CTB was compared. Repeat SD and PSG after four weeks of practice were done. After yoga nidra practice, improved reaction times for all cognition tasks were seen. Post intervention compared to baseline (95%CI; p-value, effect size) showed a significant improvement in sleep efficiency of +3.62% (0.3, 5.15; p = 0.03, r = 0.42), -20min (-35.78, -5.02; p = 0.003, d = 0.84) for wake after sleep onset and +4.19 μV2 (0.5, 9.5; p = 0.04, r = 0.43) in delta during deep sleep. Accuracy increased in VOLT (95% CI: 0.08, 0.17; p = 0.002, d = 0.79), AIM (95% CI: 0.03, 0.12; p = 0.02, d = 0.61) and NBACK (95% CI: 0.02, 0.13; p = 0.04, d = 0.56); ERT accuracy increased for happy, fear and anger (95% CI: 0.07, 0.24; p = 0.004, d = 0.75) but reduced for neutral stimuli (95% CI: -0.31, -0.12; p = 0.04, r = 0.33) after yoga nidra practice. Yoga Nidra practice improved cognitive processing and night-time sleep.