Nanotechnology mainly involves the fabrication, manipulation, and utilization of materials in nano size (materials having size less than a micron to that of individual atoms). However, nanoparticles can be synthesized by several chemical and physical approaches; now, it is also possible to integrate the use of biological entities. In recent years, mycogenesis of nanoparticles is considered as a prominent way where fungi can be used for the production of nanostructures with desirable shape and size intracellularly or extracellularly. Several researchers have reported that NADH-dependent nitrate reductase enzyme plays an important role in transformation of metal ions into metal nanoparticles. The size and shape of the nanoparticles depend on the microorganism utilized and experimental condition employed during synthesis process. Nanoparticles synthesized from microbes are safe, environmental benign and have several applications in agriculture, textile, medicine, drug delivery, biochemical sensors and allied areas. Future challenges may include large-scale production, enhancement of stability, reduced time to obtain desirable shape and size and their possible applications in several fields. In this review paper, we provide a brief overview on the emerging role of fungi in the synthesis of metal nanoparticles, possible mechanisms and their potential bio-prospective applications.