Amid escalating challenges from global climate change and increasing environmental degradation, agricultural systems worldwide face a multitude of abiotic stresses, including drought, salinity, elevated temperatures, heavy metal pollution, and flooding. These factors critically impair crop productivity and yield. Simultaneously, biotic pressures such as pathogen invasions intensify the vulnerability of agricultural outputs. At the heart of mitigating these challenges, Arbuscular Mycorrhizal Fungi (AM fungi) form a crucial symbiotic relationship with most terrestrial plants, significantly enhancing their stress resilience. AM fungi improve nutrient uptake, particularly that of nitrogen and phosphorus, through their extensive mycelial networks. Additionally, they enhance soil structure, increase water use efficiency, and strengthen antioxidant defense mechanisms, particularly in environments stressed by drought, salinity, extreme temperatures, heavy metal contamination, and flooding. Beyond mitigating abiotic stress, AM fungi bolster plant defenses against pathogens and pests by competing for colonization sites and enhancing plant immune responses. They also facilitate plant adaptation to extreme environmental conditions by altering root morphology, modulating gene expression, and promoting the accumulation of osmotic adjustment compounds. This review discusses the role of AM fungi in enhancing plant growth and performance under environmental stress.