The bidirectional interaction between the gut microbiota and the CNS, referred to as the microbiota-gut-brain axis, has gained recognition as a key regulator of stress responses and neuropsychiatric health. This review synthesizes evidence from preclinical and human studies conducted between 2010 and 2026, setting itself apart from previous reviews by focusing on the bidirectional connection between stress exposure and alterations in gut microbiota. It places particular emphasis on the molecular mechanisms involved, such as neuroinflammation, regulation of the HPA axis, neurotransmitter signaling, and how the microbiota contributes to stress adaptation. Growing evidence from preclinical and clinical research suggests that stress-induced disturbances in gut microbial composition can trigger systemic and neuroinflammation. This occurs through mechanisms such as increased intestinal permeability, translocation of lipopolysaccharides, and activation of TLR4 and NF-κB signaling pathways. Consequently, these immune disruptions adversely affect neurotrophic and neurotransmitter systems such as brain-derived neurotrophic factor (BDNF), serotonin, dopamine, and GABA contributing to anxiety, depression, cognitive impairments, and neurodegenerative conditions. Instead, deliberate modulation of the gut microbiota through probiotics, psychobiotics, fermented foods, and dietary strategies has shown potential to restore microbial balance. Such interventions can help reduce overactivation of the hypothalamic-pituitary-adrenal (HPA) axis, reduce levels of IL-6 and TNF-α, and promote BDNF-driven neuroplasticity. Experimental studies highlight how specific bacterial strains may influence outcomes under stress by enhancing CREB phosphorylation, maintaining tight junction integrity in the gut, and modulating microglial activation. Emerging therapeutic approaches such as fecal microbiota transplantation and postbiotic metabolites, including SCFAs, have also demonstrated promising potential for clinical translation.