Fungal degradation of xenobiotics involves the enzymatic breakdown of persistent, human-made compounds resistant to natural biodegradation. These xenobiotics, including pesticides, pharmaceuticals, industrial dyes and synthetic polymers, are increasingly concerning due to their toxicological impact and long-term environmental persistence. Fungi, particularly through their rich enzymatic systems, offer a biologically sustainable solution to this challenge. This chapter explores the mechanisms and functional diversity of fungal enzymes involved in xenobiotic transformation, including laccases, lignin peroxidases, manganese peroxidases, versatile peroxidases, cytochrome P450 monooxygenases, and unspecific peroxygenases. These enzymes facilitate complex chemical reactions, such as aromatic ring cleavage, hydroxylation, and oxidative dichlorination, converting harmful compounds into less toxic or more bioavailable forms. The chapter further explores and highlights emerging tools, such as immobilization and genetic engineering, that improve efficiency and field application. It emphasizes the central role of fungal enzymes in developing innovative biotechnological solutions for pollution remediation.