Background: Metabolic syndrome is a constellation of cardiovascular risk factors and its prevalence in obstructive sleep apnea (OSA) is high. The association of OSA and metabolic syndrome is termed as syndrome Z. The effect of continuous positive airway pressure (CPAP) on metabolic syndrome is still controversial. Materials and methods: A total of 145 newly diagnosed patients with OSA were enrolled in this prospective interventional study, who underwent CPAP therapy for 8 weeks. Baseline data including anthropometric variables, blood pressure, fasting glucose levels, insulin resistance and fasting lipid profile of all the study patients were collected before and after the intervention. We determined prevalence of metabolic syndrome in OSA and the effect of CPAP on the components of metabolic syndrome was determined. Results: One hundred-and-six (73.1%) patients were found to have metabolic syndrome. Eighty-four patients were compliant with CPAP therapy. There was statistically significant reduction in glucose systolic (5.5 mm Hg, p = 0.001) and diastolic blood pressure (3.5 mm Hg, p = 0.002), fasting (4.2 mg/dL, p = 0.02), homeostasis model assessment insulin resistance (1.4, p = 0.04) and triglycerides (17.3 mg/dL, p = 0.008) after CPAP therapy. There was modest reversal of metabolic syndrome manifestations in 22 of 84 patients (26.2%) after CPAP therapy. In the CPAP complaint group, a significant reduction in dyslipidemia (p = 0.04) was noted compared to non-compliant group. Conclusion: In patients with syndrome Z, 8 weeks of CPAP therapy was associated with reduction in both systolic and diastolic blood pressure, insulin resistance and triglycerides and modest reversal of metabolic syndrome manifestations.