Fungi can be a great source of biofuels, which are sustainable energy sources. Using fungi for biofuels has more advantages than traditional biofuels because they can be made directly from agricultural and household waste. Ethanol from biomass is good for the economy and environment. Third-generation biofuels, like biodiesel from fungi, are renewable and not harmful to the environment. Fungi can store lipids that help make biodiesel. Innovative approaches are needed to make fungi-derived biofuels more widely available.