The advent of fungal-based additives and bio-based ingredients in the food processing industry has marked an increase in their use and consumption owing to their functional benefits, including nutrition and flavour enhancement, preservation, and textural improvement. Despite their popularity, their use in food products is critically viewed owing to factors like mycotoxin contamination, potential allergenicity, and production challenges. This subjects them to strict critical evaluation and testing, ensuring they meet the strict criteria before approval to ensure safety and functionality. This study highlights the key role and need of regulatory frameworks in ensuring the safety, efficacy, and standardization of fungal-based additives and bio-based ingredients used in the food processing industry.