Abstract: The growing complexity of mental health disorders, coupled with evolving healthcare systems and increased expectations for quality and safety, demands a highly competent psychiatric nursing workforce. Traditional time-based and content-focused educational approaches are increasingly viewed as insufficient to prepare nurses for the dynamic and multifaceted nature of psychiatric practice. Competency-based training (CBT) models have emerged as a transformative approach in psychiatric nursing education, emphasizing measurable skills, attitudes, clinical judgment, and professional behaviors aligned with real-world practice. This review article critically examines competency-based training models in psychiatric nursing, exploring their theoretical foundations, core competencies, instructional strategies, assessment methods, implementation challenges, and outcomes. The article synthesizes current evidence and best practices to highlight how competency-based approaches enhance clinical proficiency, ethical practice, patient-centered care, and interprofessional collaboration. Implications for nursing educators, administrators, and policymakers are discussed, with a focus on strengthening mental health nursing education to meet contemporary and future mental healthcare needs.