Background: There is little information about prognostic factors in patients with COVID-19. One of the aspects of SARS-CoV-2 involvement is the sudden loss of smell, called anosmia. Objectives: This study assessed the association between COVID-19 severity and olfactory disturbance. Methods: This cohort study was performed at Taleghani Hospital of Iran from March 2021 to March 2022. Patients with a definitive diagnosis of COVID-19, according to a positive PCR test or chest CT scan, entered the study. Data on demographic information, past medical history, severity of COVID-19, olfactory disturbance at the time of hospitalization, and the course of the disease were gathered. Data were analyzed using Stata version 14 software. Results: A total of 390 patients entered the study. According to the multiple logistic regression analysis, patients with severe and critical COVID-19 were less likely to develop olfactory disturbance (OR = 0.5, P-value = 0.035, 95%CI = 0.2-0.9). Also, obesity was a statistically significant negative predictor of developing olfactory disturbance in patients with COVID-19 (OR = 0.4, P-value = 0.043, 95%CI = 0.1 – 0.9). Diabetes mellitus was a statistically significant positive predictor of developing olfactory disturbance (OR = 3.3, P-value = 0.029, 95%CI = 1.1 – 9.9). Conclusions: Patients with severe and critical COVID-19 were less likely to develop anosmia. These patients had lower serum cytokines and presented with milder disease. The severity of olfactory disturbance could be a prognostic factor in COVID-19. It is important to closely monitor patients who exhibit mild olfactory disturbance because they are at risk of more severe COVID-19.