Background: Odor identification dysfunction is an early predictor of the development of Alzheimer's disease (AD), but neuropsychiatric symptoms (NPS), which are common in AD and mild cognitive impairment (MCI), are also associated with odor identification dysfunction. Whether NPS affect the specificity of using odor identification dysfunction to predict cognitive decline in AD and MCI remains unclear. Methods: Patients (233 with MCI and 45 with AD) and 45 healthy controls (HCs) underwent assessments of odor identification (Sniffin' Sticks), NPS (Neuropsychiatric Inventory-12), and cognitive function (global cognition, memory, language, executive function, visual-spatial skill, and attention). Structural equation modeling (SEM) with bootstrapping estimation was conducted to explore the relationships between odor identification, NPS, and cognition. Results: Patients with NPS showed significantly worse performance in odor identification and cognition than patients without NPS and HCs. The SEM showed odor identification to be positively associated with cognition, and cognition had special indirect effects on odor identification through affective and psychosis symptoms (two factors extracted from Neuropsychiatric Inventory-12). Additionally, affective and psychosis symptoms partially mediated the effect of cognition on odor identification. Conclusion: Neuropsychiatric symptoms are associated with odor identification dysfunction in patients with AD and MCI. Studies exploring the relationship between odor identification dysfunction and cognitive decline in patients with AD and MCI should include an assessment of affective and psychosis symptoms, and adjust their confounding effects.