Dried oyster, a highly sought-after traditional dried aquatic product in East Asia, is valued by consumers for its distinctive aroma. However, during processing and storage, this is easily affected by factors like light, the temperature, oxygen, moisture, and microorganisms, leading to quality deterioration and the formation of fishy and rancid odors. Therefore, it is critical to elucidate the formation mechanism of a fishy off-flavor in dried oyster, clarify the influencing factors, and establish regulatory measures. In this paper, the characteristic flavors of and key volatile organic compounds in dried oyster during processing and storage are summarized, and the formation mechanism of volatile flavors is analyzed from multiple perspectives, including lipid oxidation, the Maillard reaction, and the interaction between the reaction products of the Maillard reaction and lipid oxidation, as well as degradation of thiamine, carbohydrates, amino acids, and peptides. Factors affecting the flavor quality of dried oyster, such as the raw material properties (variety, growth cycle, breeding area, etc.), shucking process, drying process, and storage methods, were also examined. Furthermore, strategies for effectively regulating fishy off-flavors in dried oyster and maintaining its original aroma are proposed, which involve selecting superior raw materials, adopting innovative shucking and drying technologies, and applying novel storage–preservation techniques. This comprehensive review aims to provide a theoretical basis and technical support for controlling fishy–rancid odors and improvement of the flavor quality of dried oysters, thereby meeting consumers' demand for high-quality aquatic products.