Submerged cultivation of medicinal mushrooms is receiving increasing attention and is considered an effective alternative to traditional substrate cultivation methods for producing fungal mycelial biomass and bioactive metabolites with diverse applications. This method allows for the control of culture environment conditions, enabling more efficient synthesis of bioactive compounds such as polysaccharides, triterpenoids, cordycepin, polyphenols, etc. Furthermore, the bioactivity of these compounds, including antioxidant, anticancer, antibacterial, and immunomodulatory effects, further emphasizes the potential of producing medicinal mushroom biomass by submerged cultivation in the pharmaceutical and functional food industries. Submerged cultivation is considered a promising alternative to traditional mushroom fruiting body cultivation because it offers better control over culture conditions and product quality, as well as shorter cultivation times. Submerged fungal cultivation has significant industrial potential; however, there are still challenges in optimizing production yield and scaling up the process for industrial application. The successful application of this method on a commercial scale depends on increasing product yield and developing new production systems to address the issues related to submerged mushroom cultivation techniques. Although many researchers are making efforts to produce bioactive metabolites from fungi, the physiological and technical aspects of submerged cultivation still require extensive and long-term research.