This study examined the impact of reduced sleep on electroencephalogram (EEG) activity during cognitive tasks in Military Clearance Diver trainees using a novel dry-electrode EEG system. Seven male participants underwent two 5-day periods: a baseline and a ‘live-in’ phase with increased workload and reduced sleep (5.4 ± 0.1 vs. 7.4 ± 0.7 hours). EEG was recorded daily in the early morning (AM) and late afternoon (PM) during a Psychomotor Vigilance Test (PVT), two oculography tests (AM: n = 4; PM: n = 3), and two minutes of eyes-closed rest. Significant increases in theta (t(29) = 2.308, p = 0.028, d = 0.421) and alpha (t(29) = 2.124, p = 0.042, d = 0.388) power spectrum densities were observed in the ‘live-in’ phase during the PVT. These findings align with increased lower frequency activity over time awake, reflecting heightened sleep propensity. Sleep loss was further confirmed by declining Odds Ratio Product (ORP) values. This study demonstrates the feasibility of dry-electrode EEG in detecting fatigue-related neural changes and highlights the potential of ORP as a quantifiable fatigue marker. These insights may inform operational settings, such as military diver performance monitoring and fatigue management strategies.