Background: Hyposmia is frequently reported as an initial symptom in coronavirus disease 2019 (COVID-19). Objective: As hyposmia accompanies cognitive impairment in several neurological disorders, we aimed to study whether hyposmia represents a clinical biomarker for both neurological involvement and cognitive impairment in mild COVID-19. We aimed to study whether olfactory dysfunction (OD) represents a clinical biomarker for both neurological involvement and cognitive impairment in mild COVID-19. Methods: Formal olfactory testing using the Sniffin’Sticks® Screening test, neuropsychological assessment using the Montreal Cognitive Assessment (MoCA), and detailed neurological examination were performed in 7 COVID-19 patients with mild disease course and no history of olfactory or cognitive impairment, and 7 controls matched for age, sex, and education. Controls were initially admitted to a dedicated COVID-19 screening ward but tested negative by real-time PCR. Results: The number of correctly identified odors was significantly lower in COVID-19 than in controls (6 ± 3, vs. 10 ± 1 p = 0.028, r = 0.58). Total MoCA score was significantly lower in COVID-19 patients than in controls (20 ± 5 vs. 26 ± 3, p = 0.042, r = 0.54). Cognitive performance indicated by MoCA was associated with number of correctly identified odors in COVID-19 patients and controls (COVID-19: p = 0.018, 95% CI = 9–19; controls: p = 0.18, r = 0.63, 95% CI = 13–18.5 r = 0.64). Discussion/Conclusion: OD is associated with cognitive impairment in controls and mild COVID-19. OD may represent a potentially useful clinical biomarker for subtle and even subclinical neurological involvement in severe acute respiratory distress syndrome coronavirus-2 infection.