In this narrative review, we examine biological processes linking psychological stress and cognition, with a focus on how psychological stress can activate multiple neurobiological mechanisms that drive cognitive decline and behavioral change. First, we describe the general neurobiology of the stress response to define neurocognitive stress reactivity. Second, we review aspects of epigenetic regulation, synaptic transmission, sex hormones, photoperiodic plasticity, and psychoneuroimmunological processes that can contribute to cognitive decline and neuropsychiatric conditions. Third, we explain mechanistic processes linking the stress response and neuropathology. Fourth, we discuss molecular nuances such as an interplay between kinases and proteins, as well as differential role of sex hormones, that can increase vulnerability to cognitive and emotional dysregulation following stress. Finally, we explicate several testable hypotheses for stress, neurocognitive, and neuropsychiatric research. Together, this work highlights how stress processes alter neurophysiology on multiple levels to increase individuals’ risk for neurocognitive and psychiatric disorders, and points toward novel therapeutic targets for mitigating these effects. The resulting models can thus advance dementia and mental health research, and translational neuroscience, with an eye toward clinical application in cognitive and behavioral neurology, and psychiatry.