Medicinal mushrooms have been valued as natural sources of bioactive compounds since times immemorial and have been recognized as potential immunomodulating and anti-cancer agents. Their consumption has consistently been shown to have beneficial effects on human health. Cancer is a generic term for several types of diseases that can be chronic and are responsible for a large number of deaths worldwide. Although there has been considerable progress in modern cancer therapy research, difficulties in understanding the molecular behavior of various types of cancers and the numerous side effects experienced by patients from treatments means that this whole subject area is still problematic. Thus, biological immunotherapy using natural bioactive compounds as supportive treatments in conventional cancer therapies has become in vogue. Bioactive metabolites isolated from medicinal mushrooms have shown potential successes in cancer treatment as biological immunotherapeutic agents that stimulate the immune system against cancer cells. They also act as an effective source of anti-cancer agents, capable of interfering with cellular signal transduction pathways linked to cancer development and progression. In this review we compile available data on the characteristics of medicinal mushrooms that appear to be particularly effective as biological immunotherapeutic agents. Major consideration is given to biological constituents and the putative mechanisms of action by which bioactive compounds act on the human body. Consideration is also given to the benefits that have been claimed for the use of mushrooms in treating cancer and the future prospects of using medicinal mushrooms as potent supportive candidate bioagents for treatment of cancers is discussed.