Gold nanoparticles (AuNPs) are a fascinating class of nanomaterial that can be used for a wide range of biomedical applications, including bio-imaging, lateral flow assays, environmental detection and purification, data storage, drug delivery, biomarkers, catalysis, chemical sensors, and DNA detection. Biological synthesis of nanoparticles appears to be simple, cost-effective, non-toxic, and easy to use for controlling size, shape, and stability, which is unlike the chemically synthesized nanoparticles. The aim of this study was to synthesize homogeneous AuNPs using pharmaceutically important Ganoderma spp. We developed a simple, non-toxic, and green method for water-soluble AuNP synthesis by treating gold (III) chloride trihydrate (HAuCl4) with a hot aqueous extract of the Ganoderma spp. mycelia. The formation of biologically synthesized AuNPs (bio-AuNPs) was characterized by ultraviolet (UV)-visible absorption spectroscopy, X-ray diffraction (XRD), Fourier transform infrared spectroscopy (FTIR), energy dispersive X-ray (EDX), dynamic light scattering (DLS), and transmission electron microscopy (TEM). Furthermore, the biocompatibility of as-prepared AuNPs was evaluated using a series of assays, such as cell viability, lactate dehydrogenase leakage, and reactive oxygen species generation (ROS) in human breast cancer cells (MDA-MB-231). The color change of the solution from yellow to reddish pink and strong surface plasmon resonance were observed at 520 nm using UV-visible spectroscopy, and that indicated the formation of AuNPs. DLS analysis revealed the size distribution of AuNPs in liquid solution, and the average size of AuNPs was 20 nm. The size and morphology of AuNPs were investigated using TEM. The biocompatibility effect of as-prepared AuNPs was investigated in MDA-MB-231 breast cancer cells by using various concentrations of AuNPs (10 to 100 μM) for 24 h. Our findings suggest that AuNPs are non-cytotoxic and biocompatible. To the best of our knowledge, this is the first report to describe the synthesis of monodispersed, biocompatible, and soluble AuNPs with an average size of 20 nm using Ganoderma spp. This study opens up new possibilities of using an inexpensive and non-toxic mushroom extract as a reducing and stabilizing agent for the synthesis of size-controlled, large-scale, biocompatible, and monodispersed AuNPs, which may have future diagnostic and therapeutic applications.