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Acute inflammation is the result of a complex signal transduction pathway that protects and heals our body and is necessary for the good health and normal wellbeing. Whereas, chronic inflammation can be correlated well with the onset of a plethora of autoimmune disorders; rheumatoid arthritis, systemic lupus and polymyalgia rheumatic and other diseases like asthma, inflammatory bowel diseases, cardiovascular disorders, ulcerative colitis and Crohn’s disease but it has also been reported to be associated with the onset of various cancers. An effective anti-inflammatory drug should be able to inhibit the development of chronic inflammation without interfering in normal homeostasis. A number of herbal drugs have been identified that can target inflammatory cytokines. Among these, Ganoderma lucidum: a powerful medicinal mushroom has been found to have immune-modulating and immune-potentiating capabilities and has been characterized as a wonder herb. This review mainly focuses on the molecular mechanism of anti-inflammatory and anti-allergic action of this mushroom and also sheds light on various patent studies related to its pharmacological action.