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The demand for the green synthesis of nanoparticles has gained prominence over the conventional chemical and physical syntheses, which often entails toxic chemicals, energy consumption and ultimately lead to negative environmental impact. In the green synthesis approach, naturally available bio-compounds found in plants and fungi can be effective and have been proven to be alternative reducing agents. Fungi or mushrooms are particularly interesting due to their high content of bioactive compounds, which can serve as excellent reducing agents in the synthesis of nanoparticles. Apart from the economic and environmental benefits, such as ease of availability, low synthesis/production cost, safe and no toxicity, the nanoparticles synthesized from this green method have unique physical and chemical properties. Stabilisation of the nanoparticles in an aqueous solution is exceedingly high, even after prolonged storage with unperturbed size uniformity. Biological properties were significantly improved with higher biocompatibility, anti-microbial, anti-oxidant and anti-cancer properties. These remarkable properties allow further exploration in their applications both in the medical and agricultural fields. This review aims to explore the mushroom-mediated biosynthesis of nanomaterials, specifically the mechanism and bio-compounds involved in the synthesis and their interactions for the stabilisation of nanoparticles. Various metal and non-metal nanoparticles have been discussed along with their synthesis techniques and parameters, making them ideal for specific industrial, agricultural, and medical applications. Only recent developments have been explored in this review. [Display omitted] • A detailed mechanism contributing to the mycogenic synthesis of NPs has been described. • Demonstrates the role of different mushroom species to different sizes, shapes, stability and homogeneity of NPs. • Provides ideal physical and chemical properties of the mycogenic synthesized NPs. • Illustrates properties as well as unique applications arising from species-specific NPs. • Explores wider applications extending to biomedical, environmental and industrial sectors. [ABSTRACT FROM AUTHOR]