Climate discourse frequently emphasizes forests, oceans, and atmospheric chemistry, yet the organisms that ultimately determine the fate of most terrestrial carbon are microscopic and often overlooked. Fungi mediate decomposition, regulate nutrient exchange with plants, restructure soils, and influence greenhouse gas production. Through these processes, they act as intermediaries between primary productivity and atmospheric feedback. This chapter critically examines fungal roles in carbon stabilization and release, arguing that climate projections remain incomplete without explicit recognition of fungal functional diversity. Evidence from boreal systems, peatlands, grasslands, and agricultural soils suggests that fungal responses to warming are neither uniform nor linear. In some contexts, fungal activity enhances long-term carbon storage; in others, it accelerates atmospheric carbon return. By integrating ecological mechanisms with recent biogeochemical findings, this chapter positions fungi not as passive decomposers but as dynamic regulators within Earth’s climate system.