From ancient times mushrooms have been estimated by mankind as a safe surprise and kin medicine in Asian and Chinese system. The last century has been verified the activities of Asian work in affiliation of pharmaceutical potential of mushrooms. The major medicinal benefits of mushrooms has been exposed so far as an, neuroprotective, anti-diabetic, anti-tumor, anti-cancer, immunomodulatory, and anti-microbial agents. The mushrooms that have been trusted with reward are pleurotus , agaricus , Hericium erinaceus, Stropharia rugosoannulata cytocybe ,antrodia , Termitomyces, Xerocomus, Sarcodon , Daldinia, Flammulina, Innonotus , Tremella and Funlia etc,. Pharmaceutical properties of mushrooms mainly includes the homeostasis maintenance, biorhythms regulation and help in the treatment of various life threatening diseases such as neuronal diseases and cancer etc. Polysaccharrides contents in mushrooms work as immunomodulating agents. Edible and medicinal mushrooms exhibit various bioactive compounds that includes infratopicrin, MD fraction, 10-hydroxy-infratopicrin, hispidin, dictyophorines, tricholomalides, termitomycesphin that enhance nerve growth in the brain and protect against neurotoxic stimuli such as inflammation that contribute to neurodegenerative diseases like dementia and Alzheimer's disease and many other non-communicable diseases and these bioactive compounds are not commonly found in plants. TAU are the neuronal-specific microtubule binding protein and mutation in these protein cause severe neurodegenerative diseases such as Alzheimer's and dementia etc. TAU accumulated in large quantity in mushroom body neurons that result in the prevention of pre-mature death and neuro degeneration. Total estimated medical cost for the treatment of dementia was 604 dollar billion in 2013 but mushroom works as a functional food and have neuroprotective and anti-inflammatory potential Mushrooms extract have the potential to improve and enhance the brain function and improve human health. Mushrooms are considered as healthy food as they are low in calories and fat but rich in proteins and dietary fibers. Mushrooms contain all nine essential amino acids. This article revise the current findings on the pharmacologically effective compounds of the mushrooms, their neuroprotective potential , anti- tumor potential and various therapeutic potential of mushrooms. The growing demonstration from a variety of investigate groups all over world related to protective and beneficial utilization of mushroom extracts have increased the importance of studies related to mushroom extracts and their aspects.