The implementation of increasingly stringent standards for the discharge of waste into the environment, as well as the increase in cost of habitual disposal or treatment options, has motivated the development of different processes for the treatment and disposal of wastes. Solid waste may seem to be the most ordinary forms of wastes, but they could be responsible for many problems such as spread of diseases and emission of green house gases. Over the years, solid waste disposal was a neglected issue as these wastes were simply dumped on land in the outside of the city. Unscientific disposal of solid wastes causes an adverse impact on all components of the environment and human health. Transformation of wastes and pollutants are classified as being chemical or biological in nature. Microorganisms are the agents which bring about the conversion of these wastes into useful products like fuel gases, fuel alcohol and also compost which can be used as manure. Among different bioconversion of solid waste composting appears to be a safe form of treatment of solid waste and the reclamation of the nutrients containing in them. During the last few years, composting by mushroom fungi has gained wide acceptance as a key component of integrated solid waste management. It has been promoted as an eco-friendly and sustainable solution to urban waste management. It encourages the production of beneficial microorganism (mainly mushroom fungi) which in turn breaks down organic matter to create humus. Humus, a rich nutrient filled material, increase the nutrient content on soils and helps soil to retain moisture. Addition to this mushrooms directly utilize bioconversion of solid wastes generated from industry and agriculture into edible biomass, which could also be regarded as a functional food or as a source of drugs and pharmaceuticals.