Mushrooms, regarded as an underutilized natural resource, have recently gained attention for their diverse bioactive compounds, including peptides, polysaccharides, fatty acids, phenols, and terpenoids, with demonstrated antimicrobial, antioxidant, and plant growth-promoting properties. Certain mushroom compounds exhibit inhibitory effects on plant pathogens, positioning them as promising resources for sustainable agriculture. In this review, we discuss the potential of mushrooms, particularly edible varieties, as rich sources of biologically active compounds for agricultural applications. In light of the challenges associated with synthetic pesticides, this review highlights the need for environmentally friendly alternatives. Integrated pest management strategies, emphasizing natural and biological means, offer viable options to reduce the reliance on synthetic pesticides. The potential of botanical pesticides, including those derived from edible mushrooms (EMs), has been explored as a promising alternative in pest management. Additionally, the paper discusses the commercialization potential of EM-derived pesticides given their marketability as edible products. Overall, this review emphasizes the multifaceted potential of EM-derived bioactive compounds as alternative biopesticides in agriculture, suggesting avenues for further research and development.