Podaxis pistillaris, an abundant gasteroid mushroom, has become an important biological element in arid and semiarid communities worldwide. This mushroom possesses cosmetic, edible, and medicinal attributes, playing a crucial role in communities in countries such as Australia, India, Saudi Arabia, Yemen, and Mexico. Proximate studies highlight the nutritional richness of P. pistillaris, characterized by high protein content and essential bioelements such as K, P, and Mg. Furthermore, P. pistillaris is integral to the traditional medicine of indigenous communities in America, Asia, and Africa, where it is revered for its purported wound-healing, anti-inflammatory, and coagulant properties. In the case of Mexico, the Seri community uses and markets P. pistillaris in various forms, including ointments and, within the region, its spores. Chemical analysis of this species reveals notable compounds, including epicorazines A-C exhibiting antimicrobial properties, along with polysaccharides such as β-glucans, and a recently identified ergosterol derivative named podaxisterol. Despite its importance, the chemical characterization and assessment of the biological activity of its compounds have been largely understudied. Consequently, there are currently no wound-healing products on the market derived from fungi, as the majority originate from plant sources. This work aims to present the essential aspects of P. pistillaris's ethnobiological use, medicinal properties, bioactive compounds, and biotechnological applications. In addition, it underscores the overlooked status of P. pistillaris among fungi inhabiting arid areas, emphasizing its potential as a valuable subject for further research.