Background: Exploration of antibiotics from microorganisms became widespread in the academia and the industry with the serendipitous discovery of Penicillin from Penicillium notatum by Sir Alexander Fleming. This embarked the golden era of antibiotics which lasted for over 60 years. However, the traditional phenotypic screening was replaced with more rational and smarter methods of exploration of bioactive compounds from fungi and microorganisms. Fungi have been responsible for providing a variety of bioactive compounds with diverse activities which have been developed into blockbuster drugs such as Cyclosporine, Caspofungin, Lovastatin and Fingolimod etc. It has been reported that ca. 40% of the 1453 New Chemical Entities (NCE’s) approved by USFDA are natural products, natural product inspired or mimics many of which have their origins from fungi. Hence fungal compounds are playing a very important role in drug discovery and development in the pharmaceutical industry.Methods: We undertook structured searches of bibliographic databases of peer-reviewed research literature which pertained to natural products, medicinal chemistry of natural products and drug discovery from fungi. With the strategic improvement in screening and identification methods, fungi are still a potential resource for novel chemistries. Thus the searches also comprised of bioactive agents from fungi isolated or derived from special ecological groups and lineages. To find different molecules derived or isolated from fungi under clinical studies, clinical trial data from the NIH as well as from pharmaceutical companies were also explored. This comprised of data wherein the pharmaceutical industries have acquired or licensed a fungal bioactive compound for clinical study or a trial.Results: Natural product chemistry and medicinal chemistry continue to play an important role in converting a bioactive compound into therapeutic moieties or pharmacophores for new drug development.Conclusion: Thus one can say fungal bioactive compounds are alive and well for development into new drugs as novel ecological groups of fungi as well as novel chemistries are being uncovered. This review further emphasizes the collaboration of fungal biologists with chemists, pharmacologists and biochemists towards the development of newer drugs for taking them into the drug development pipeline.