Purpose To determine the possible adverse effects of radioactive iodine (RAI) treatment on the olfactory functions of patients with differentiated thyroid carcinoma. Materials and Methods This prospective clinical study included 63 Turkish patients who had been diagnosed with papillary thyroid carcinoma only to ensure homogeneity. The Connecticut Chemosensory Clinical Research Center olfactory test was administered at 1 week before treatment and at the third week and the first year after treatment. Triiodothyronine, thyroxine, thyroid stimulating hormone, thyroglobulin, and antithyroglobulin levels were measured 1 week before treatment and 2 weeks after treatment. Results The smell threshold test, smell identification test, and total smell scores showed statistically significant decreases after treatment when compared with the pretreatment scores (p = 0.000). No significant differences were noted between the late term and early term after RAI for either the identification score (p = 0.502) or the total score (p = 0.051). The Spearman correlation analysis indicated a significant correlation between age and RAI before and after treatment for the smell threshold test, smell identification test, and total smell scores (p < 0.05). A total of 54% of the patients displayed normosmia in the posttreatment period. A few patients had mild hyposmia before RAI, 27% had mild hyposmia in the early stage after RAI, and 29% had mild hyposmia in the late stage. Conclusion The olfactory function deteriorated in almost half of the patients in the early stage after RAI. Mild and moderate hyposmia in particular occurred in the first year after RAI.