Mushrooms are a recognized component of the human diet, with versatile medicinal properties. Some mushrooms are popular worldwide for their nutritional and therapeutic properties. However, some species are dangerous because they cause toxicity. There are many reports explaining the medicinal and/or toxic effects of these fungal species. Cases of serious human poisoning generally caused by the improper identification of toxic mushroom species are reported every year. Different substances responsible for the fatal signs and symptoms of mushroom toxicity have been identified from various poisonous mushrooms. Toxicity studies of mushroom species have demonstrated that mushroom poisoning can cause adverse effects such as liver failure, bradycardia, chest pain, seizures, gastroenteritis, intestinal fibrosis, renal failure, erythromelalgia, and rhabdomyolysis. Correct categorization and better understanding are essential for the safe and healthy consumption of mushrooms as functional foods as well as for their medicinal use.