Biofungicides use living organisms and their by-products for the management of severe fungal pathogens in crop plants. They have emerged as a key player in sustainable agriculture as they are eco-friendly and cost-effective in comparison to corresponding synthetic chemical fungicides. Depending on the source of origin, biofungicides have been categorised into microbial biofungicides, including bacterial and fungal, while plant based biofungicides comprises of algal, lichen, and angiosperm based biofungicides. A number of strains of Bacillus, Streptomyces and PGPRs presents positive effects and substantially modulates plant-induced and systemic defense responses thereby strengthening plant immunity towards fungal pathogens. Among the fungal based biofungicides, Trichoderma is a well-known biocontrol agent that is utilized from a long time in disease management. Simultaneously, a number of endophytic fungi also affect plant physiological and biochemical defense by increasing the activity of various defense enzymes, gene transcripts as well as antimicrobial proteins that protects the plant from the harmful effects of pathogens. Plant based biofungicides have gained wide applicability in disease management strategies due to their ease in application. Plants contain a variety of essential oils and volatile chemicals causing deleterious effects on the growth of fungal pathogens. With advancements in separation techniques like GC–MS and LC–MS, novel bioactive secondary metabolites have been studied and isolated from different plant extracts and evaluated for biocontrol activity. The present review aims to highlight the different categories of biofungicides, their synthesis, and mode of application as well as delineate their mechanism for biocontrol of fungal pathogens in various crop plants.