Mushrooms are recognized as functional foods that not only supply essential nutrients but also deliver a wide range of additional health benefits. These benefits are largely attributed to the presence of various bioactive compounds, including polysaccharides, phenolic compounds, triterpenoids, and lectins found in diverse mushroom species. These bioactive compounds, offering numerous health benefits, make medicinal mushrooms promising candidates for developing dietary supplements as well as for the treatment and control of chronic conditions such as diabetes, cardiovascular ailments, and neurodegenerative diseases. They can also play supportive roles in existing treatments, such as those for cancer. Their immunoregulatory properties can also be exploited to combat microbial infections and autoimmune diseases. This chapter summarizes the range of bioactive properties associated with medicinal mushrooms and their clinical significance, underscoring their role in contemporary therapeutic approaches while also discussing the current challenges and future research prospects.