Production of the microbial pigments is one of the emerging fields of research due to a growing interest of the industry for safer products, easily degradable and eco-friendly. Fungi constitute a valuable source of pigments because they are capable of producing high yields of the substance in the cheap culture medium, making the bioprocess economically viable on the industrial scale. Some fungal species produce a dark-brown pigment, known as melanin, by oxidative polymerization of phenolic compounds, such as glutaminyl-3,4-dihydroxybenzene (GDHB) or catechol or 1,8-dihydroxynaphthalene (DHN) or 3,4-dihydroxyphenylalanine (DOPA). This pigment has been reported to act as "fungal armor" due to its ability to protect fungi from adverse conditions, neutralizing oxidants generated in response to stress. Apart from the scavenging activity, melanin exhibits other biological activities, including thermoregulatory, radio-and photoprotective, antimicrobial, antiviral, cytotoxic, anti-inflammatory, and immunomodulatory. Studies have shown that the media composition and cultivation conditions affect the pigment production in fungi and the manipulation of these parameters can result in an increase in pigment yield for large-scale pigment production. This chapter presents a comprehensive discussion of the research on fungal melanin, including the recently discovered biological activities and the potential use of this pigment for various biotechnological applications in the fields of biomedicine, dermocosmetics, materials science, and nanotechnology.