Diabetes mellitus is a life-threatening chronic metabolic disease caused by lack of insulin and/or insulin dysfunction, characterized by high levels of glucose in the blood (hyperglycemia). Millions worldwide suffer from diabetes and its complications. Significantly, it has been recognized that type 2 diabetes is an important preventable disease and can be avoided or delayed by lifestyle intervention. Presently, there are many chemical and biochemical hypoglycemic agents (synthetic drugs), that are used in treating diabetes and are effective in controlling hyperglycemia. However, as they may have harmful side-effects and fail to significantly alter the course of diabetic complications, natural anti-diabetic drugs from medicinal plants have attracted a great deal of attention. Medicinal mushrooms have been valued as a traditional source of natural bioactive compounds over many centuries and have been targeted as potential hypoglycemic and anti-diabetic agents. Bioactive metabolites including polysaccharides, proteins, dietary fibres, and many other biomolecules isolated from medicinal mushrooms and their cultured mycelia have been shown to be successful in diabetes treatment as biological antihyperglycemic agents. In this review we discuss the biological nature of diabetes and, in particular, explore some promising mushrooms that have experimental anti-diabetic properties, preventing or reducing the development of diabetes mellitus. The importance of medicinal mushrooms as agents of medical nutrition therapy and how their metabolites can be used as supportive candidates for prevention and control of diabetes is explored. Future prospects for this field of study and the difficulties and constraints that might affect the development of rational drug products from medicinal mushrooms are discussed.