Current food systems are highly complex, with interdependencies across regions, resources, and actors, and conventional food production is a major contributor to climate change. Transitioning to sustainable protein sources is therefore critical to meet the nutritional needs of a growing global population while reducing environmental pressures. Filamentous fungi present a promising solution by converting agro-industrial side streams into mycoproteins—nutrient-dense, sustainable proteins with a carbon footprint more than ten times lower than beef. This review evaluates the potential of mycoproteins derived from fungi cultivated on low-cost substrates, focusing on their role in advancing sustainable food systems. Evidence indicates that mycoproteins are rich in protein (13.6–71% dw), complete amino acids, fiber (4.8–25% dw), essential minerals, polyphenols, and vitamins while maintaining low fat and moderate carbohydrate content. Fermentation efficiency and product quality depend on substrate type, nutrient availability, and fungal strain, with advances in bioreactor design and AI-driven optimization enhancing scalability and traceability. Supported by emerging regulatory frameworks, mycoproteins can reduce reliance on animal-derived proteins, valorize agricultural by-products, and contribute to climate-resilient, nutritionally rich diets. Integration into innovative food products offers opportunities to meet consumer preferences while promoting environmentally sustainable, socially equitable, and economically viable food systems within planetary boundaries.