Background: Olanzapine is widely used for schizophrenia and bipolar I disorder, yet its role in adolescents remains debated due to metabolic risks. Objective: To review mechanisms, efficacy, safety, pharmacokinetics, and guideline positions of olanzapine in youth, with comparison to adults. Methods: Narrative synthesis of randomized trials, open-label studies, meta-analyses, and major guidelines (APA, NICE, Canadian), with focused appraisal of pediatric data. Results: Olanzapine’s multi-receptor antagonism (D₂, 5-HT₂A/2C, H₁, muscarinic, α₁) underpins robust antipsychotic effects. In adolescents, short-term RCTs show significant improvement in PANSS/BPRS-C and YMRS versus placebo; efficacy is broadly comparable to risperidone and aripiprazole. Pharmacokinetics are similar to adults, though exposure is ~27–34% higher in youth. Adverse effects—especially weight gain, dyslipidemia, hyperprolactinemia, and glycemic abnormalities—are more pronounced in adolescents. Guidelines endorse olanzapine as an option for schizophrenia and as first-line for acute mania; OFC is recommended for bipolar depression by most but not NICE. LAI olanzapine is not approved <18 years. Conclusions: Olanzapine is effective in adolescent psychosis and mania but carries substantial metabolic liability. Given no clear efficacy advantage over other SGAs, it is best positioned as a second-line agent in youth, with preference for monotherapy, cautious dosing, and stringent metabolic monitoring. Evidence for benefits on negative and cognitive symptoms in adolescents remains limited.