Bipolar disorder and schizophrenia are serious psychiatric conditions that cause a significant reduction in quality of life and shortened life expectancy. Treatments including medications and psychosocial support exist, but many people with these disorders still struggle to participate in society and some are resistant to current therapies. Although the exact pathophysiology of bipolar disorder and schizophrenia remains unclear, increasing evidence supports the role of oxidative stress and redox dysregulation as underlying mechanisms. Oxidative stress is an imbalance between the production of reactive oxygen species generated by metabolic processes and antioxidant systems that can cause damage to lipids, proteins, and DNA. Sleep is a critical regulator of metabolic homeostasis and oxidative stress. Disruption of sleep and circadian rhythms contribute to the onset and progression of bipolar disorder and schizophrenia and these disorders often coexist with sleep disorders. Furthermore, sleep deprivation has been associated with increased oxidative stress and worsening mood symptoms. Dysfunctional brain metabolism can be improved by fatty acid derived ketones as the brain readily uses both ketones and glucose as fuel. Ketones have been helpful in many neurological disorders including epilepsy and Alzheimer’s disease. Recent clinical trials using the ketogenic diet suggest positive improvement in symptoms for bipolar disorder and schizophrenia as well. The improvement in psychiatric symptoms from the ketogenic diet is thought to be linked, in part, to restoration of mitochondrial function. These findings encourage further randomized controlled clinical trials, as well as biochemical and mechanistic investigation into the role of metabolism and sleep in psychiatric disorders. This narrative review seeks to clarify the intricate relationship between brain metabolism, sleep, and psychiatric disorders. The review will delve into the initial promising effects of the ketogenic diet on mood stability, examining evidence from both human and animal models of bipolar disorder and schizophrenia. The article concludes with a summary of the current state of affairs and encouragement for future research focused on the role of metabolism and sleep in mood disorders.