Mushrooms are considered as nutritionally functional foods and source of physiologically beneficial medicines. Hericium erinaceus, also known as Lion’s Mane Mushroom or Hedgehog Mushroom, is an edible fungus, which has a long history of usage in traditional Chinese medicine. This mushroom is rich in some physiologically important components, especially β-glucan polysaccharides, which are responsible for anti-cancer, immuno-modulating, hypolipidemic, antioxidant and neuro-protective activities of this mushroom. H. erinaceus has also been reported to have anti-microbial, anti-hypertensive, anti-diabetic, wound healing properties among other therapeutic potentials. This review article has overviewed the recent advances in the research and study on H. erinaceus and discussed the potential health beneficial activities of this mushroom, with the recognition of bioactive compounds responsible for these medicinal properties.