This article presents a critical review of the actual state of fungal activities on environmental pollutants, fungal diversity, the use of fungi in the degradation of chemical pollutants, enzyme degrading systems and perspectives on the use of fungi in bioremediation and unexplored research. The ability of fungi to transform or metabolize chemical pollutants has received much attention due to environmental persistence and chemical toxicity. The fungal degradation of xenobiotics is looked upon as an effective method of removing these pollutants from the environment by a process which is currently known as bioremediation. This review summarizes information from fundamental works that have revealed that a wide variety of fungi are capable of degrading an equally wide range of toxical chemical. The capacity of non-ligninolytic and ligninolytic fungi in the bioremediation of polycyclic aromatic hydrocarbon (PAHs), benzene-toluene-ethylbenzene-xylene (BTEX), chlorophenols, polychlorinated biphenyl, munitions waste and pesticides have been discussed. Besides this, several extracellular enzymes are involved in the metabolism of xenobiotic compounds as well as other factors related to these processes.