Members of the genera Phellinus and Inonotus, including P. linteus, P. igniarius, P. ribis, I. obliquus and I. xeranticus are well-known medicinal fungi (mushrooms) and have been used in treatment of cancer, diabetes, bacterial and viral infections and ulcer. Adverse effects of these medicinal mushrooms have not yet been reported, indicating the safe nature of these mushrooms. Polysaccharides, particularly b-glucan, are considered the compounds responsible for the biological activity of medicinal mushrooms. However, there is only a limited amount of evidence to indicate that polysaccharides are in fact responsible for the biological effects of these medicinal mushrooms. Recently, many research groups have begun identification of active low-MW compounds in medicinal mushrooms, with a focus on the yellow polyphenol pigments, which are composed of a styrylpyrone class of compounds. Interestingly, a representative group of medicinal fungi, including P. linteus, P. igniarius, P. ribis, I. obliquus and I. xeranticus were shown to produce a large and diverse range of styrylpyrone-type polyphenol pigments that exhibited various biological activities, including anti-oxidative, anti-inflammatory, cytotoxic, anti-platelet aggregation, anti-diabetic, anti-dementia and anti-viral effects. Styrylpyrone pigments in mushrooms are thought to have a role similar to that of flavonoids in plants. The unique and unprecedented carbon skeleton of fused styrylpyrone might be an attractive molecular scaffold for pharmacological applications. In this review, the structural diversity, biological effects and biogenesis of styrylpyrone-class polyphenols from medicinal fungi are described.