Although sleep restriction is associated with decrements in daytime alertness and neurobehavioural performance, there are considerable inter-individual differences in the degree of impairment. This study examined the effects of short-term sleep restriction on neurobehavioural performance and sleepiness, and the associations between individual differences in impairments and circadian rhythm phase. Healthy adults (n = 43; 22 M) aged 22.5 ± 3.1 (mean ± SD) years maintained a regular 8:16 h sleep:wake routine for at least three weeks prior to laboratory admission. Sleep opportunity was restricted to 5 hours time-in-bed at home the night before admission and 3 hours time-in-bed in the laboratory, aligned by wake time. Hourly saliva samples were collected from 5.5 h before until 5 h after the pre-laboratory scheduled bedtime to assess dim light melatonin onset (DLMO) as a marker of circadian phase. Participants completed a 10-min auditory Psychomotor Vigilance Task (PVT), the Karolinska Sleepiness Scale (KSS) and had slow eye movements (SEM) measured by electrooculography two hours after waking. We observed substantial inter-individual variability in neurobehavioural performance, particularly in the number of PVT lapses. Increased PVT lapses (r = -0.468, p < 0.01), greater sleepiness (r = 0.510, p < 0.0001), and more slow eye movements (r = 0.375, p = 0.022) were significantly associated with later DLMO, consistent with participants waking at an earlier circadian phase. When the difference between DLMO and sleep onset was less than 2 hours, individuals were significantly more likely to have at least three attentional lapses the following morning. This study demonstrates that the phase of an individual's circadian system is an important variable in predicting the degree of neurobehavioural performance impairment in the hours after waking following sleep restriction, and confirms that other factors influencing performance decrements require further investigation.