Depression is associated with reduced olfactory function. This relationship is assumed to be based on either a reduced olfactory bulb volume or diminished functioning of higher cortical areas. As previous results are controversial, we aimed to re-evaluate central olfactory processing in depression. We recorded the BOLD signal of 21 patients with Major Depressive Disorder and 21 age and gender matched healthy controls during odor presentation. In addition, we measured the individual olfactory bulb volume, tested odor identification and odor threshold, and asked for hedonic odor perception. In both groups, odor presentation led to a pronounced activation of primary olfactory areas. However, secondary olfactory areas were significantly less activated in depressed individuals. The two groups did not differ in olfactory bulb volume. Our results point towards altered olfactory processing in patients in those regions that relate to sensory integration and attention allocation. Difficulties in cognitive processing could impact olfactory function in depression. We are therefore in favor of a top-down mechanism originating in higher cortical areas explaining parts of the relation between depression and olfaction.