Edibles are the source of life, providing the body with essential nutrients to maintain physiological functions. As far back as ancient times, people have used edibles to treat diseases, also known as dietary therapy. Edible fungi, as favored foods, not only have rich nutritional value but also have various pharmacological effects and have a significant role in the treatment of insomnia. This review delves into the potential mechanisms of edible fungi in the sedative-hypnotic effect, focusing on several species of edible fungi with remarkable sleep-improving effects including Cordyceps militaris, Ganoderma lucidum, Poria cocos, Hericium erinaceus and Armillaria mellea. The modulatory effects of active ingredients, including polysaccharides, triterpenes, and nucleosides, found in edible fungi, on the neurotransmitter system, antioxidant, anti-inflammatory pathways, gut microflora homeostasis, and immune function are reviewed. For instance, C. militaris reduces excitatory neurotransmitters like glutamate and acetylcholine. P. cocos polysaccharides regulate gut flora to positively influence sleep. G. lucidum enhances γ-aminobutyric acid (GABA) and serotonin expression, boosts antioxidant activity, and reduces inflammatory mediators, collectively improving sleep quality. In addition to the aforementioned improvements on insomnia by the active components in edible fungi, they also exert sedative and hypnotic effects through other mechanisms. This review summarizes the sedative and hypnotic mechanisms of these edible fungi, providing new perspectives and methodologies for the research on the sedative and hypnotic activity of Changbai Mountain C. militaris and other edible fungi, which is conducive to exploring and utilizing more edible fungal resources from the Changbai Mountain with such activities.