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Tooth Abscess
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One of the most common causes of a foul smelling nasal discharge is an abscessed or infected tooth. Other symptoms of a dental problem are swelling under the jaw on the infected side and a slight discharge from the eye on that side. Pain is also sometimes associated with an abscess.
Gutteral Pouch Infection
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The horse's guttural pouch is an air-filled sack that lies at the back of the throat and is part of the eustachian tubes. Occasionally, bacteria, fungi, or a foreign object, such as a piece of grain or seed, will enter this area. If the horse cannot expel or overcome these, an infection will result and produce a foul smelling discharge.
Other Health Issues
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An equine case of sinusitis will often produce a smelly discharge, especially if the condition is chronic. The same is true in horses affected by heaves, the equine version of chronic obstructive pulmonary disease, or COPD. A horse with strangles---a disease caused by a bacterial infection---also will produce a foul smelling discharge.
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A Foul Mucous Discharge in a Horse
While a nasal discharge is not uncommon in horses, especially after strenuous exercise or under dusty conditions, a foul smelling discharge is usually a sign of a serious health issue.