The sense of smell is interrelated with psychosocial functioning. Olfactory disorders often decrease quality of life but treatment options for people with olfactory loss are limited. Additionally, olfactory loss accompanies and precedes psychiatric and neurodegenerative diseases. Regular, systematic exposure to a set of odors, i.e., olfactory training (OT) has been offered for rehabilitation of the sense of smell in clinical practice. As signals from the olfactory bulb are directly projected to the limbic system it has been also debated whether OT might benefit psychological functioning, i.e., mitigate cognitive deterioration or improve emotional processing. In this review we synthesize key findings on OT utility in the clinical practice and highlight the molecular, cellular, and neuroanatomical changes accompanying olfactory recovery in people with smell loss as well as in experimental animal models. We discuss how OT and its modifications have been used in interventions aiming to support cognitive functions and improve well-being. We delineate main methodological challenges in research on OT and suggest areas requiring further scientific attention.