The production of nanoparticles (NPs) from chemical and physical synthesis has ended due to the involvement of toxic byproducts and harsh analytical conditions. Innovation and research in nanoparticle synthesis are derived from biomaterials that have gained attention due to their novel features, such as ease of synthesis, low-cost, eco-friendly approach, and high water solubility. Nanoparticles obtained through macrofungi involve several mushroom species, i.e., Pleurotus spp., Ganoderma spp., Lentinus spp., and Agaricus bisporus. It is well-known that macrofungi possess high nutritional, antimicrobial, anti-cancerous, and immune-modulatory properties. Nanoparticle synthesis via medicinal and edible mushrooms is a striking research field, as macrofungi act as an eco-friendly biofilm that secretes essential enzymes to reduce metal ions. The mushroom-isolated nanoparticles exhibit longer shelf life, higher stability, and increased biological activities. The synthesis mechanisms are still unknown; evidence suggests that fungal flavones and reductases have a significant role. Several macrofungi have been utilized for metal synthesis (such as Ag, Au, Pt, Fe) and non-metal nanoparticles (Cd, Se, etc.). These nanoparticles have found significant applications in advancing industrial and bio-medical ventures. A complete understanding of the synthesis mechanism will help optimize the synthesis protocols and control the shape and size of nanoparticles. This review highlights various aspects of NP production via mushrooms, including its synthesis from mycelium and the fruiting body of macrofungi. Also, we discuss the applications of different technologies in NP high-scale production via mushrooms.