Bioactive peptides (BPs) are multifunctional proteins that have a variety of activities and strong pharmacological effects. Due to the food-derived BPs' extensive spectrum of health benefits and numerous bioactivities, including antioxidant, immunological, anti-ageing, and anti-inflammatory activities, research on these compounds has not been interrupted throughout the past few decades. To balance the daily rise in the intake of functional foods and nutraceuticals, it is important to adopt healthy lifestyle choices. As a result, these peptides are crucial in the creation of numerous functional meals. Additionally, studies have demonstrated that peptide treatments are safer from a toxicological standpoint and have fewer adverse effects than small molecule medications. Long recognized for their culinary qualities, mushrooms have been a favourite food of the most important civilizations in history. They are currently the subject of renewed investigation due to their medicinal properties. Mushrooms provide substantial amounts of necessary proteins, dietary nondigestible carbohydrates, unsaturated fats, minerals, and different vitamins. These nutritional advantages have increased mushroom consumption and led to the creation of a variety of processed mushroom products. Bioactive peptides that have been directly or indirectly isolated from mushrooms or their mycelia are known as mushroom bioactive peptides (MBAPs). The advantages of MBAPs for promoting health and preventing disease, including their antihypertensive, antioxidant, and antibacterial actions, are becoming more widely acknowledged. However, this area is still underdeveloped, and there aren't many pertinent reviews. Therefore, the purpose of this study was to outline the current state of MBAP research with a focus on preparatory and biological operations.