Recent years have shown a surge in interest in incorporating living systems into materials research to synthesize functional materials using biological resources. Among these, mycelium-based materials, notably biofoam, have emerged as innovative solutions for repurposing organic wastes that were previously considered unusable. The growth of mycelium, vital for the synthesis of biofoam, is influenced by a multuple of factors including substrate composition, moisture content, temperature, nutrient availability, pH levels, oxygen concentration, and measures for contamination control. Additionally, physical stimulation techniques have been explored to enhance mycelium growth, ranging from cold stress-induced adaptations to electrical shock-induced modifications and optimization of sound treatments and light exposure. This review highlights the growing interest in biofoam composite materials, a novel class of environmentally friendly and cost-effective materials that are gaining popularity, for advancing sustainable construction practices. Biofoam composites use organic fungal growth as a low-energy bio-fabrication process to transform abundant agricultural byproducts and waste into viable alternatives to energy-intensive manufactured building materials. Their versatility in composition and manufacturing methods allows them to be used in a wide range of applications, including insulation and door cores, panelling, flooring, and furniture components. Notably, biofoams outperform synthetic foams and engineered wood in terms of thermal insulation, sound absorption, and fire resistance, making them highly promising for construction industry. Besides, due to its customizable composition and production method, biofoam can be used in the replacement of foams, leather, wood, and plastics in a variety of applications such as water treatment and filtration, medical supplies and healthcare applications. However, despite their remarkable properties, biofoam typically serve as non- or semi-structural supplements to traditional construction materials due to inherent limitations. Nevertheless, the useful material properties of these materials, combined with their low cost, ease of manufacture, and environmental sustainability, imply that they will have an important part to play in the development of environmentally friendly materials in the future.