More than 125 known species of fungi, all part of the Agaricales order, can spontaneously emit light. This bioluminescence results from the oxidation of a luciferin derived from caffeic acid by oxygen under the action of the enzyme luciferase. The production and regeneration of caffeic acid tie together the Krebs cycle and the Shikimic Acid pathway in both fungi and plants. Therefore, successful genetic manipulation of luciferase has led to the development of bioluminescent reporters and eukaryotic organisms that exhibit self-sustained glow. This review aims to discuss the underlying mechanisms of fungal bioluminescence, with a focus on the biochemical and chemical processes that lead to light emission, along with an elaboration on its extensive biotechnological applications.