Smell loss has caught public attention during the recent COVID-19 pandemic. Research on olfactory function in health and disease gains new momentum. Smell deficits have long been recognized as an early clinical sign associated with neuropsychiatric disorders. Here we review research on the associations between olfactory deficits and neuropathological conditions, focusing on recent progress in four areas: (1) human clinical studies of the correlations between smell deficits and neuropsychiatric disorders; (2) development of olfactory mucosa-derived tissue and cell models for studying the molecular pathologic mechanisms; (3) recent findings in brain imaging studies of structural and functional connectivity changes in olfactory pathways in neuropsychiatric disorders; and (4) application of preclinical animal models to validate and extend the findings from human subjects. Together, these studies have provided strong evidence of the link between the olfactory system and neuropsychiatric disorders, highlighting the relevance of deepening our understanding of the role of the olfactory system in pathophysiological processes. Following the lead of studies reviewed here, future research in this field may open the door to the early detection of neuropsychiatric disorders, personalized treatment approaches, and potential therapeutic interventions through nasal administration techniques, such as nasal brush or nasal spray.