Objectives: Impaired awareness of functional deficits is often observed in people with Korsakoff syndrome (KS) and may result in refusal of care, although this area has been understudied. This study aimed to investigate levels of impaired awareness and their relationships with neuropsychiatric symptoms (NPS) in people with KS residing in specialized nursing homes. Methods: A cross-sectional, observational study was conducted among 215 residents with KS or other alcohol-related cognitive disorders. Awareness was measured with the Patient Competency Rating Scale (PCRS). NPS and subsyndromes were measured with the Neuropsychiatric Inventory–Questionnaire (NPI-Q). Adjusted multilevel regression analyses were performed to examine the relationships between the level of awareness and NPS. Results: The mean level of impaired awareness was 39.3 (SD = 19.9) indicating moderate impairment. Twenty-nine percent of the residents had no or mildly impaired awareness; 37% were moderately impaired, and 34% were severely impaired. Residents with moderately impaired awareness showed more severe apathy than residents with no or mildly impaired awareness (difference 1.23; 95% CI 1.02-1.48; p = 0.03). No associations were found between the level of awareness and other NPI outcomes. Cognitive functioning seems to have the strongest impact on the association between level of awareness and NPS in KS residents. Conclusions: Impaired awareness of functional deficits is highly common in KS residents; however, apart from apathy, is not significantly related with NPS. Additional research should further examine, which interventions are effective in dealing with impaired awareness in these people, particularly when apathy is present.