Traditional Chinese medicine (TCM) is a class of natural drugs with multiple components and significant therapeutic effects through multiple targets. It also originates from a wide range of sources containing plants, animals and minerals, and among them, plant-based Chinese medicine also includes fungi. Fungal traditional Chinese medicine is a medicinal resource with a long history and widespread application in China. Accumulating evidence confirms that polysaccharide is the main pharmacodynamic material on which fungal TCM is based. The purpose of the current systematic review is to summarize the extraction, isolation, structural identification, biological functions, quality control and medicinal and edible applications of polysaccharides from fungal TCM in the past three years. This paper will supplement and deepen the understanding and application of polysaccharides from fungal TCM, and propose some valuable insights for further research and development of drugs and functional foods.