Does Venice smell?

I have heard this "fact" many times. Another version states that this is especially true in the summer.

I was on a trip to Italy only last month and visited Venice as part of it. I spent three days there, took vaporettos (ferries) and walked most of the time. The water ways and canals do host a wide variety of algae and water-weeds and it is indeed true that you occasionally get a whiff of "algae-odor" when the wind's right and you happen to be on the side of some particular water-ways or canals.

It smelt different to me but not bad. However, stating this as a reason for not going to Venice is almost laughable.

Yes. I went there in September and there was a consistent whiff of stagnant water more or less everywhere. It wasn't exactly oppressive, but I didn't get used to it either and I noticed it regularly. I was however only there for two stints of two days each which I accept isn't a large amount of acclimatisation.

Every city smells, and every city smells differently from any other city.
If you're there long enough you no longer notice, to a new arrival it's quite distinct.

Venice, being a city with a lot of salt water in a warm climate, no doubt smells rather distinctly compared to many landlocked cities.
And that's all there is to it.

I was in Venice about 6 weeks ago, and heard the same thing beforehand! As it turns out, in the summer it does have a distinct smell of its own, but it's certainly not oppressive. I'm a Londoner, and it's similar to what you might smell by the Thames embankment on a warm day; brackish saltwater is always going to whiff a bit, but not particularly unpleasantly, and I can't say there was a noticeable sewage smell at all.

That's probably partly down to the programme of canal cleaning @techturtle mentions above - there's some really quite interesting stuff on Venicepedia about the city's sewage system and how they regularly service the canals, draining sections entirely. If you like that kind of thing...

I'm Italian, born near Venice and I even lived in the city for one year recently. My experience is that Venice used to smell bad when the weather was really hot, and kind of still does sometimes, but not as bad as in the past. Of course it's relative, some people just hate the smell of the sea, I'm just refering to that kind of sewage/dumpster smell.
I also remember that in my childhod (twenty years ago) I was astonished by how much rubbish was left in the street, while nowadays they're doing a pretty good job keeping it clean (I mean, as clean as a city with that much turist flow can be with daily sweepings). Even in the past the smell was not that bad, annoying but bearable - IMHO some of Shanghai streets smell a lot worse, for example -, but local people were often complaining or joking about it. So, I think there's a partial truth in this word of mouth, but it's far from the hell they're describing, and it's probably referring to the past.
Anyway, my advice would still be to avoid the warmest days if you want to visit; and not because of the smell, but because all the walking and bridge crossing you have to do to get anywhere becomes really exhausting. And it's overcrowded, yes. But still, it's Venice, you'll really miss something unique if you decide to skip it.

It does smell a bit, and it's not a nice smell, but at the same time it's not so disgusting that it should put you off going.