Functional genes encode various biological functions required for the life activities of organisms. By analyzing the functional genes of edible and medicinal fungi, varieties of edible and medicinal fungi can be improved to enhance their agronomic traits, growth rates, and ability to withstand adversity, thereby increasing yield and quality and promoting industrial development. With the rapid development of functional gene research technology and the publication of many whole-genome sequences of edible and medicinal fungi, genes related to important biological traits have been mined, located, and functionally analyzed. This paper summarizes the advantages and disadvantages of different functional gene research techniques and application examples for edible and medicinal fungi; systematically reviews the research progress of functional genes of edible and medicinal fungi in biological processes such as mating type, mycelium and fruit growth and development, substrate utilization and nutrient transport, environmental response, and the synthesis and regulation of important active substances; and proposes future research directions for functional gene research for edible and medicinal fungi. The overall aim of this study was to provide a valuable reference for further promoting the molecular breeding of edible and medicinal fungi with high yield and quality and to promote the wide application of edible and medicinal fungi products in food, medicine, and industry.