The ongoing global health crisis due to the novel severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) has significantly impacted all aspects of life. While the majority of early research following coronavirus disease caused by the SARS-CoV-2(COVID-19) has focused on the physiological effects of the virus, a substantial body of subsequent studies has shown that the psychological burden of the infection is also considerable. Patients, even without mental illness history, were at an increased susceptibility to developing mental health and sleep disturbances during or after COVID-19 infection. Viral neurotropism and inflammatory storm damaging the blood-brain barrier have been proposed as possible mechanisms for mental health manifestations, along with stressful psychological factors and indirect consequences asthrombosis and hypoxia. The virus has been found to infect peripheral olfactory neurons and exploit axonal migration pathways, exhibiting metabolic changes in astrocytes, detrimental to fueling neurons and building neurotransmitters. Patients with COVID-19 present dysregulated and overactive immune responses resulting in impaired neuronal function and viability, adversely affecting sleep and emotion regulation. Additionally, several risk factors have been associated with the neuropsychiatric sequelae of the infection, such as female sex, age, preexisting neuropathologies, severity of initial disease and sociological status. This review aimed to provide an overview of mental health symptoms and sleep disturbances developed during COVID 19 and to analyze the underlying mechanisms and risk factors of psychological distress and sleep dysfunction.