Abstract: Mental health nursing education plays a pivotal role in preparing nursing students to deliver holistic, ethical, and evidence-based psychiatric care. Despite robust theoretical foundations in mental health nursing curricula, a persistent gap remains between classroom instruction and clinical practice. This theory–practice gap often results in reduced clinical confidence, skill deficits, and difficulty applying conceptual knowledge in real-world psychiatric settings. This review article critically examines the current state of mental health nursing education, focusing on the challenges and opportunities in bridging theoretical learning with clinical practice. It explores innovative teaching–learning strategies, including simulation-based education, reflective practice, competency-based clinical training, interprofessional education, and the use of digital technologies. The role of nurse educators, clinical mentors, and mental health institutions in facilitating meaningful learning experiences is discussed in detail. By synthesizing evidence from nursing education literature, this article highlights best practices and proposes future directions to strengthen the integration of theory and practice in mental health nursing education, ultimately enhancing student competence, patient outcomes, and professional preparedness.