This study established a biological fermentation process using Saccharomyces cerevisiae and Lactobacillus plantarum to deodorize squid cartilage homogenate. The optimal fermentation conditions for S. cerevisiae were determined as follows: fermentation time 105 min, temperature 34 °C, and inoculum size 0.85%. For L. plantarum, the optimum conditions were 79 min, 34.5 °C, and 4.5% inoculum. Based on electronic nose and HS-SPME-GC-MS analyses, S. cerevisiae outperformed L. plantarum in eliminating key offensive odor compounds, especially sulfur-containing compounds and aldehydes, while promoting the formation of pleasant aroma compounds such as esters and ketones (e.g., carvone and δ-pentenol). Mechanistic insights suggest that the enhanced deodorization efficiency of S. cerevisiae may be attributed to its multi-pathway synergistic metabolism, involving enzymes like dioxygenases and sulfide oxidases that facilitate the conversion of malodorous substances into odorless or pleasantly aromatic compounds. These findings provide a valuable theoretical and practical foundation for the high-value utilization of squid processing by-products and propose a promising bio-deodorization strategy for aquatic products.