Tick-borne encephalitis (TBE) is a widespread viral infection of the central nervous system with increasing incidence in Europe and northern Asia. Post-infectious sequelae are frequent, and patients with TBE commonly experience long-term fatigue and subjective sleep disturbances. Obstructive sleep apnea (OSA) may be a contributing factor, and objective sleep studies with polysomnography (PSG) are lacking. Forty-two adults, 22 TBE patients (cases), diagnosed in Region Västra Götaland, Sweden, between 2012 and 2015, and 20 controls without a known TBE history, underwent an overnight PSG, respectively. All participants responded to questionnaires. The cases and controls were similar regarding age, sex, obesity, concomitant diseases, smoking, and alcohol habits. Despite similar PSG characteristics such as total sleep time and OSA severity indices, the TBE cases reported statistically more sleep-related functional impairment on the Functional Outcome of Sleep Questionnaire (FOSQ) compared with the controls (median scores 18.1 vs. 19.9; p<0.05). In a multivariate analysis, TBE correlated significantly with the lower FOSQ scores (unstandardized β -1.80 [%95 confidence interval -3.02 - -0.58]; p = 0.005) independent of age, sex, total sleep time and apnea-hypopnea-index. TBE cases with OSA reported the lowest scores on the FOSQ compared with the other subgroups with TBE or OSA alone, and the ones with neither TBE nor OSA. TBE is associated with impaired functional outcomes, in which concomitant OSA may worsen the subjective symptoms. Further studies are warranted to determine the effect of treatment of concomitant OSA on functional outcomes with regard to optimal rehabilitation of TBE.