Background: Olfactory processing is becoming of increasing interest as a marker of disturbed cognitive function in schizophrenia. This has been paralleled by several consistent anatomical findings in the illness. Furthermore, olfactory processing is mediated by many of the same medial temporal lobe areas of the brain that have been implicated in schizophrenia. In this study we investigate a range of smell functions in a group of patients with schizophrenia during their first week of hospitalization for acute psychosis. In addition, we tested for correlations between smell scores and disease severity as well as for correlations between smell scores and clinical symptomatology. Methods: Olfactory function was assessed in 20 schizophrenia patients in their 1st week of hospital admission for acute psychosis and compared with matched controls. Olfaction was evaluated via three stages: threshold, discrimination and identification of different odors utilizing the Sniffin' Sticks Test Battery. Patients were rated for clinical symptomatology at the time of testing of smell by means of several clinical rating scales. Results: Schizophrenia patients scored significantly lower on total smell score, discrimination, and identification abilities. A significant association was observed between hospitalization duration and total smell score and smell discrimination. No significant associations between smell and clinical symptomatology were observed. Discussion: Study observations confirm demonstrated decresased sense of smell in schizophrenia patients and suggest cautiously that smell impairment may be a potential marker of more serious illness as expressed in longer hospital stay. Several neurophysiological mechanisms may account for these findings which require further investigation in order to substantiate potential hypotheses.