The rising demand for sustainable materials has led to the exploration of novel sources for biopolymer production, such as fungal waste biomass for polylactic acid (PLA). Fungal waste, comprising agricultural, industrial, and municipal residues, represents a substantial resource for lactic acid production, the key precursor to PLA. Recent studies have demonstrated that enzymatic hydrolysis of fungal biomass can yield up to 80% fermentable sugars, which are subsequently converted into lactic acid through microbial fermentation with efficiencies reaching 90%. Optimization of fermentation techniques, including continuous processes and integrated bioreactor designs, has further enhanced lactic acid yields, surpassing 100 g/L in some cases. Purification methods, such as crystallization, distillation, and, prominently, membrane separation, have been employed to achieve lactic acid purities exceeding 99%, ensuring high-quality PLA production. Challenges remain in scaling up production due to biomass supply variability and economic feasibility. However, recent advancements in genetic engineering have shown promising results in increasing fungal biomass productivity and lactic acid yield. Utilizing fungal waste biomass for PLA production not only mitigates environmental impacts but also addresses waste management concerns, contributing to a more sustainable circular economy. This comprehensive overview emphasizes the necessity of continued research and development to unlock the full potential of the fungal biomass in bioplastic production, thereby fostering a greener future for generations to come.