Associations between the fat mass and obesity-associated (FTO) gene and obesity are well-established. However, recent studies have linked FTO to addiction phenotypes and dopaminergic signaling, thus suggesting broader psychiatric implications. We explored this assumption by conducting a phenome-wide association study across 4756 genome-wide association studies, identifying 23–26 psychiatric traits associated with FTO at the multiple-corrected significance level. These traits clustered into four categories: substance use, chronotype/sleep, well-being, and neuroticism. To validate these findings, we analyzed a functionally suggestive FTO variant (rs1421085) in a separate cohort, examining its impact on (i) alcohol use based on the Alcohol Use Disorders Identification Test (AUDIT), (ii) subjective well-being based on the WHO (Ten) Well-Being Index, and (iii) neuroticism based on Schafer’s Five Factor Model or the Karolinska Scales of Personality. Our results confirmed a direct association between rs1421085 and neuroticism that was independent of age, sex, alcohol use, body mass index (BMI), and childhood adversities. Interestingly, while no direct association with alcohol intake was observed, both cross-sectional and lagged longitudinal mediation analyses uncovered indirect relationships between rs1421085 and problematic alcohol use (AUDIT-P), with increased neuroticism acting as the intermediary. Mediation analyses also supported an indirect effect of rs1421085 on lower well-being through the pathways of increased neuroticism and BMI. Our study is the first to validate a direct association between FTO and neuroticism. However, additional studies are warranted to affirm the causal pathways linking FTO to well-being and alcohol use through neuroticism.