It is known that olfactory dysfunction occurs early in neurodegenerative diseases, such as Alzheimer’s and Parkinson’s diseases and frontotemporal dementia (FTD). Dementia and psychiatric disorders share a number of clinical features, such as psychosis and depression. As such, misdiagnoses across these conditions are not uncommon. A variety of studies show smell dysfunction in schizophrenia, but little is known about other psychiatric disorders. In order to verify the link between olfaction and psychiatric disorders, a medical literature search was carried out in may 2021 using PubMed, and Cochrane Library, including the terms “olfaction” and “olfactory dysfunction” combined individually with “psychiatric disorder” and “depression”. Systematic reviews and meta-analyses written in English from 1991 to 2021 were included. Even thought one review suggested that patients with depression have reduced olfactory performance when compared with healthy, results show studies with different methodology and design which makes it difficult to reach definitive conclusions as how and if olfactory functioning is related to depression. Further studies with the same methodology that examines and separates central and peripheral olfactory processing are needed. Another review showed robust olfactory deficits in schizophrenia and at-risk youths, what indicates that olfactory measures may be a useful marker of schizophrenia risk status. Finally, a systematic review compared olfactory function in FTD, depression, schizophrenia and bipolar disorder. Results revealed that odor identification but not discrimination was severely impaired in FTD, both were impaired in schizophrenia, while no olfactory impairments were observed in depression. Findings in bipolar disorder were mixed. This review showed that testing odor identification and discrimination differentiates FTD from depression and schizophrenia, but not from bipolar disorder. It is possible to conclude that olfactory dysfunction occurs in schizophrenia and dementia but not in depression.