Objective Olfactory deficits in schizophrenia patients have been suggested to reflect medial temporal and/or prefrontal brain abnormalities. In this study, we examined the relationship between different olfactory functions and volumes of the hippocampus–amygdala complex (HAC) and the orbitofrontal brain region using magnetic resonance imaging (MRI). Methods Thirty-three young men with schizophrenia (DSM-IV) and 40 healthy controls performed unirhinal olfactory assessment including the main olfactory functions (threshold, discrimination, and identification), and odor judgements (intensity, edibility, familiarity, and pleasantness). Volumes of regions in the medial temporal lobe (hippocampus and amygdala) and the prefrontal region (orbitofrontal gray and white matter) were measured on MRI scans. Results Compared with controls, patients showed bilaterally impaired thresholds, quality discrimination and identification, as well as edibility judgements. Olfactory deficits were not attributable to smoking, premorbid intelligence, or impaired thresholds. Relative to controls, patients had bilateral reduced hippocampus and amygdala volumes. In patients, smaller hippocampus volumes were associated with poorer olfactory discrimination ability. Conclusions Olfactory deficits in schizophrenia appear to be associated with morphometric abnormalities in the medial temporal rather than the orbitofrontal region (OFR). These results indicate that olfactory quality discrimination deficits are related to structural hippocampus abnormalities. Future studies of genetic and behavioral high-risk samples seem warranted.