Postoperative cognitive dysfunction is a common complication associated with anesthesia and surgery. Sevoflurane is a widely used volatile anesthetic in the clinical setting. Preclinical studies show that sevoflurane alone does not appear to cause cognitive dysfunction. Here, we examined whether sevoflurane induces cognitive decline under chronic intermittent hypoxia (CIH) conditions. Rats were exposed to CIH or control for 4 weeks. Two weeks after starting intermittent hypoxia, these animals underwent either 2.6% sevoflurane or vehicle exposure for 4 h. Four weeks after CIH, Morris Water Maze task showed that both groups of CIH rats exhibited significantly longer latency to locate the hidden platform and had shorter dwell-time in the goal quadrant compared with respective controls. Notably, CIH + sevoflurane rats had much higher latency and less dwell-time than CIH + vehicle rats. Molecular studies revealed that pro-inflammatory cytokine expression and activated microglia in the hippocampus were increased in both groups of CIH rats, with greater increases in CIH + sevoflurane rats. No differences in above measured parameters were observed between two control groups. Sevoflurane reduced PPAR-γ expression and activity in both control and CIH rats. Moreover, activated microglia was positively correlated with proinflammatory cytokine expression and negatively correlated with PPAR-γ expression and activity in CIH groups. The results suggest that microglia-mediated neuroinflammation in the hippocampus plays an important role in the pathogenesis of CIH-associated cognitive dysfunction, and that a moderate duration of sevoflurane exaggerates cognitive decline under CIH conditions by aggravating microglia-mediated neuroinflammation via downregulation of PPAR-γ in the hippocampus.