Introduction: A major health issue in individuals living at high altitude regions is an increase in the number of red blood cells (RBCs). This condition generates a series of physiological alterations, including the nervous system, where damage can occur due to increased blood viscosity. This increased viscosity, in turn, could compromise oxygen uptake, potentially leading to a degree of cognitive impairment. Objective: To determine the association between exposure to chronic hypoxia and sleep quality with the degree of cognitive impairment (IQ) in a young adult population residing at different altitude levels. Methodology: Two hundred apparently healthy subjects of both sexes, aged 21 to 26 years, permanently residing in four cities at different altitudes—Lima, Arequipa, Puno, and La Rinconada (50 participants per location)—were evaluated. Physiological variables such as oxygen saturation (SpO2), blood pressure (BP), heart rate (HR), and hemoglobin (Hb) and hematocrit (Hct) levels were measured. Cognitive impairment was assessed using the Montreal Cognitive Assessment (MoCA), and sleep quality was assessed using the Pittsburgh Sleep Quality Index (PSQI). ANOVA, chi-square, and linear regression models were used to analyze correlations. Results: Hemoglobin (Hb) levels increased gradually with altitude, reaching a maximum of 19.47 ± 3.01 g/dL in La Rinconada, while SpO2 decreased to 81.64% at the same site. Moderate to severe cognitive impairment was a finding exclusive to the La Rinconada population (5100 m), where only 10% of subjects remained unaffected. Regression analysis showed that for each unit increase in Hb, the MoCA score decreased by 0.59 points, indicating that elevated Hb levels were associated with varying degrees of cognitive impairment. No association was found between sleep quality and the degree of cognitive impairment. Conclusions: Chronic exposure to severe hypoxia (>5000 m) is associated with a greater presence of cognitive impairment, while sleep quality is not associated with any degree of cognitive impairment.