The main target of the present review is to draw attention to the current perspectives, advances, evidences, challenges, and future development of medicinal mushroom science in the 21 st century. Medicinal mushrooms and fungi are thought to possess approximately 130 medicinal functions, including antitumor, immunomodulating, antioxidant, radical scavenging, cardiovascular, anti-hypercholesterolemic, antiviral, antibacterial, anti-parasitic, antifungal, detoxification, hepatoprotective, and antidiabetic effects. Many, if not all, higher Basidiomycetes mushrooms contain biologically active compounds in fruit bodies, cultured mycelium, and cultured broth. Special attention is paid to mushroom polysaccharides. The data on mushroom polysaccharides and different secondary metabolites are summarized for approximately 700 species of higher hetero- and homobasidiomycetes. Numerous bioactive polysaccharides or polysaccharide-protein complexes from the medicinal mushrooms described appear to enhance innate and cell-mediated immune responses, and exhibit antitumor activities in animals and humans. Whilst the mechanism of their antitumor actions is still not completely understood, stimulation and modulation of key host immune responses by these mushroom compounds appear central. Polysaccharides and low-molecular-weight secondary metabolites are particularly important due to their antitumor and immunostimulating properties. Several of the mushroom compounds have been subjected to Phase I, II, and III clinical trials, and are used extensively and successfully in Asia to treat various cancers and other diseases. Special attention is given to many important unsolved problems in the study of medicinal mushrooms.