The medicinal mushroom Leucocalocybe mongolica has received much attention from biologists since the end of the last century due to its rich bioactive compounds and high efficiency against a wide range of chronic diseases. Many years ago, L. mongolica was used in traditional Chinese medicine. About 100 chemical components have been isolated and/or identified in L. mongolica, especially fruiting bodies. This mushroom is rich in polysaccharides, sterols, lectins, laccase, amino acids, and volatile compounds. The bioactive compounds from L. mongolica possess significant pharmacological activities such as antitumor, antiproliferative, antidiabetic, and hypotensive effects. However, some bioactive characteristics of this mushroom still need further investigation to elucidate the multiple biological and pharmacological uses. Furthermore, L. mongolica requires scientific proof regarding its use to enhance milk production and mammary gland differentiation. In this review, we summarize the pharmacological and therapeutic properties of L. mongolica and provide suggestions for future research on this medicinal mushroom.