It is estimated that today, about 500 million people live with a mental health disorder. The broad definition of mental disorders includes depression, anxiety, bipolar, eating disorders, and schizophrenia, among others. Mental health disorders are diagnosed by licensed psychiatrists who often use DSM-5 to make a diagnosis. Still, considering the neurological bases of most psychiatric disorders, we can confidently say that psychiatry and neuroscience are interdependent. Most prevalent mental disorders, such as depression and generalized anxiety, are associated with structural and functional changes in the fronto-limbic brain areas. Therefore, it may be beneficial to use neuroimaging techniques to understand the nature of psychotic disorders and how they influence brain function. An electroencephalogram (EEG) is a non-invasive, efficient, and relatively inexpensive test that measures electrical activity in the brain using electrodes placed on the scalp. This testing technique has been known to be a prominent diagnostic tool for epilepsy. However, recently, there has been growing research on the role of EEG in diagnosing other disorders, such as psychiatric and neuropsychiatric disorders. Patients with psychiatric disorders may have abnormal EEG findings, such as epileptic activity or slow wave activity, which can be a non-specific sign of brain disease. The prevalence of EEG abnormalities in patients with mental illness is significantly elevated. It ranges from 20% to 70% higher when compared to healthy controls. This article talks about the scope of using EEG in diagnosing and understanding mental disorders, its limitations, and the future of EEG as a diagnostic tool for psychiatric disorders.