Carpal tunnel syndrome, a median nerve entrapment neuropathy, is characterized by sensorimotor deficits. Recent reports have shown that this syndrome is also characterized by functional and structural neuroplasticity in the primary somatosensory cortex of the brain. However, the linkage between this neuroplasticity and the functional deficits in carpal tunnel syndrome is unknown. Sixty-three subjects with carpal tunnel syndrome aged 20–60 years and 28 age- and sex-matched healthy control subjects were evaluated with event-related functional magnetic resonance imaging at 3 T while vibrotactile stimulation was delivered to median nerve innervated (second and third) and ulnar nerve innervated (fifth) digits. For each subject, the interdigit cortical separation distance for each digit’s contralateral primary somatosensory cortex representation was assessed. We also evaluated fine motor skill performance using a previously validated psychomotor performance test (maximum voluntary contraction and visuomotor pinch/release testing) and tactile discrimination capacity using a four-finger forced choice response test. These biobehavioural and clinical metrics were evaluated and correlated with the second/third interdigit cortical separation distance. Compared with healthy control subjects, subjects with carpal tunnel syndrome demonstrated reduced second/third interdigit cortical separation distance (P < 0.05) in contralateral primary somatosensory cortex, corroborating our previous preliminary multi-modal neuroimaging findings. For psychomotor performance testing, subjects with carpal tunnel syndrome demonstrated reduced maximum voluntary contraction pinch strength (P < 0.01) and a reduced number of pinch/release cycles per second (P < 0.05). Additionally, for four-finger forced-choice testing, subjects with carpal tunnel syndrome demonstrated greater response time (P < 0.05), and reduced sensory discrimination accuracy (P < 0.001) for median nerve, but not ulnar nerve, innervated digits. Moreover, the second/third interdigit cortical separation distance was negatively correlated with paraesthesia severity (r = −0.31, P < 0.05), and number of pinch/release cycles (r = −0.31, P < 0.05), and positively correlated with the second and third digit sensory discrimination accuracy (r = 0.50, P < 0.05). Therefore, reduced second/third interdigit cortical separation distance in contralateral primary somatosensory cortex was associated with worse symptomatology (particularly paraesthesia), reduced fine motor skill performance, and worse sensory discrimination accuracy for median nerve innervated digits. In conclusion, primary somatosensory cortex neuroplasticity for median nerve innervated digits in carpal tunnel syndrome is indeed maladaptive and underlies the functional deficits seen in these patients.