Green chemistry, also called sustainable chemistry, is an area of chemistry focused on the designing of products and processes that minimize the use and generation of hazardous substances. Biological approaches based on industrial and environmental biotechnology is focusing on the development of “clean technologies” which emphasizes on the maximum production, minimize waste generation, treatment and conversion of waste in some useful form. Further, these clean technologies focus on the use of biological methods for the remediation of waste. One of the biological methods is mycoremediation which is based on the use of fungi and mushroom for the removal of waste from the environment. Mushrooms and other fungi play a key role in the development of new biological remediation techniques (e.g., using mycorrhizae to stimulating plant growth) and filtration technologies (e.g. using fungi to lower bacterial levels in polluted water). Mushrooms possess enzymatic machinery for the degradation of waste/pollutants and therefore, can be applied for a wide variety of pollutants. Mushrooms can also be used for dyeing wool and other natural fibers. The chromophores of mushroom dyes are organic compounds and produce strong and vivid colors, and all colors of the spectrum can be achieved with mushroom dyes. Before the invention of synthetic dyes, mushrooms were the source of many textile dyes. Ozonolysis by lyophilized cultures of Trametes hirsuta yields aldehydes from alkenes, representing a biotransformation processes. Also some fungi are capable of de novo synthesis of flavouring and aroma compounds when grown on standard culture media. Also there are some group of fungi have bioluminescence properties. All these activities of fungi approach to sustainable and green chemistry. In this review we have attempted to present a detailed account of the green applications of mushroom such as coloring, aroma, remediation, bioluminescent etc.