Green synthesis of nanoparticles (NPs) is a safe, eco-friendly, and relatively inexpensive alternative to conventional routes of NPs production. These methods require natural resources such as cyanobacteria, algae, plants, fungi, lichens, and naturally extracted biomolecules such as pigments, vitamins, polysaccharides, proteins, and enzymes to reduce bulk materials (the target metal salts) into a nanoscale product. Synthesis of nanomaterials (NMs) using lichen extracts is a promising eco-friendly, simple, low-cost biological synthesis process. Lichens are groups of organisms including multiple types of fungi and algae that live in symbiosis. Until now, the fabrication of NPs using lichens has remained largely unexplored, although the role of lichens as natural factories for synthesizing NPs has been reported. Lichens have a potential reducible activity to fabricate different types of NMs, including metal and metal oxide NPs and bimetallic alloys and nanocomposites. These NPs exhibit promising catalytic and antidiabetic, antioxidant, and antimicrobial activities. To the best of our knowledge, this review provides, for the first time, an overview of the main published studies concerning the use of lichen for nanofabrication and the applications of these NMs in different sectors. Moreover, the possible mechanisms of biosynthesis are discussed, together with the various optimization factors influencing the biological synthesis and toxicity of NPs.