Mushrooms are known for their nutritional, medicinal, and ecological benefits, making them a valuable resource for health and sustainability research. In this review, we compiled results of around 85 peer-reviewed studies retrieved from PubMed, Scopus, ScienceDirect and Google Scholar between 2010 and 2025. From the reviewed evidence it is concluded that mushrooms contain a long list of proteins, Dietary Fiber, vitamins, minerals, and bioactive compounds such as polysaccharide, terpenoids, phenolic compounds etc. In vitro and in vivo studies have shown antioxidant, antimicrobial, anti-inflammatory, antidiabetic, immunomodulatory and anticancer activity of these constituents. Several well-studied fungi like Agaricus bisporus, Pleurotus ostreatus, Lentinula edodes, Ganoderma lucidum, Hericium erinaceus and Trametes versicolor have shown considerable therapeutic potential, including free radical scavenging, immune modulation and supportive effects on cancer treatment. In addition to their health attributes, mushrooms play a role in the quest for environmental sustainability in a number of ways such as bioremediation, biodegradation, recycling of agricultural wastes, as well as low impact cultivation. All these collectively indicate that mushrooms are multi-functional organisms that possess a great potential as functional foods, natural therapeutics and as sustainable biological resources. While there are promising results, continued clinical trials and the development of large-scale cultivation, product development, and pharmaceutical applications are required to take full advantage of their nutritional, medicinal and ecological benefits. Keyword: Mushroom, Antidiabetic potential, sustainability, Cancer therapy, Phenolic compounds, Antioxidant activity, Antimicrobial activity.