Early-life stress during critical periods of brain development can have long-term effects on physical and mental health. Oxytocin is a critical social regulator and anti-inflammatory hormone that modulates stress-related functions and social behaviors and alleviates diseases. Oxytocin-related neural systems show high plasticity in early postpartum and adolescent periods. Early-life stress can influence the oxytocin system long term by altering the expression and signaling of oxytocin receptors. Deficits in social behavior, emotional control, and stress responses may result, thus increasing the risk of anxiety, depression, and other stress-related neuropsychiatric diseases. Oxytocin is regarded as an important target for the treatment of stress-related neuropsychiatric disorders. Here, we describe the history of oxytocin and its role in neural circuits and related behaviors. We then review abnormalities in the oxytocin system in early-life stress and the functions of oxytocin in treating stress-related neuropsychiatric disorders.