ABSTRACT RATIONALE: Cognitive impairment is one of the least well-studied COPD comorbidities. It is known to occur in hypoxemic patients, but its presence during acute exacerbation is not established. OBJECTIVES: To assess neuropsychological performance in COPD patients awaiting discharge from hospital following acute exacerbation and recovery and compare with stable outpatients with COPD and healthy controls. METHODS: 110 participants were recruited: 30 COPD in-patients awaiting discharge following an exacerbation, 50 stable COPD outpatients, and 30 controls. Neuropsychological tests measured episodic memory, executive function, visuo-spatial function, working memory, processing speed and an estimate of premorbid abilities. Follow up cognitive assessments for stable and exacerbating patients were completed at 3 months. RESULTS: Exacerbators were significantly worse (p<0.05) than stable patients over a range of measures of cognitive function, independent of hypoxemia, disease severity, cerebrovascular risk or pack years smoked. In exacerbators up to 57% were in the impaired range and 20% were considered to have suffered a pathological loss in processing speed. Impaired cognition was associated with worse SGRQ score (r=-0.40-0.62 p≤0.02) and longer length of stay (r=0.42, p =0.02). There was no improvement in any aspect of cognition at recovery three months later. CONCLUSION: In patients hospitalized with an acute exacerbation impaired cognitive function is associated with worse health status and greater hospital length of stay. A significant proportion of patients are discharged home with unrecognized mild-severe cognitive impairment, which may not improve with recovery.