Fungal pigments, especially carotenoids, are an emerging field in biotechnology owing to their various biological activities and numerous industrial applications. Natural pigments are secondary metabolites produced by fungi that help them survive under environmental stress and have great potential as eco-friendly substitutes for synthetic colorants. Scientists have now been covering the entire metabolic pathways and regulatory mechanisms that are involved in carotenoid biosynthesis in this review. It discusses the biological functions of fungal carotenoids, for example, their antioxidant, antimicrobial, and anticancer activities, in greater detail. In addition to carotenoids, the article also discusses the functional relevance and applications of other fungal pigments, including anthraquinones, azaphilones, and riboflavin. They are critically investigated for their roles in the development of cosmetics, food colorants, and drugs based on their bioactivity, efficacy, and marketability. Moreover, the review discusses the importance of fungal pigments as pharmacologically active substances, illustrating their therapeutic potential. Finally, the study entails how to genetically engineer and biotechnologically intervene in these pathways to optimize pigment production. Further work to improve yield, stability, and applicable scalability could be pursued using previously unexplored fungal strains for further pigment discovery. This is a pivotal broad review for the diversification and development of potential sustainable high-value bioproducts from fungal pigments across industries.
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