Mushroom cultivation is one of the important components of sustainable agriculture. It generates additional income, manages agricultural waste and provides alternate food source and medicines. Mushroom is a highly demanded crop worldwide but due to less awareness and lack of knowledge farmers don’t focus on such profit making allied agriculture activities. Hill states like Himachal Pradesh, Uttarakhand, Jammu & Kashmir are very suitable to carry out mushroom cultivation practices due to their favourable environmental conditions. They are also home to many medicinal and exclusive wild edible mushrooms that have the potential to fetch a good amount of profit through exports. For the socio-economic upliftment of the people of the Himalayan region, allied activities like mushroom cultivation, bee-keeping, dairy farming, need to be focused along with principal farming operations. Through this article, we have tried to present a picture of the status of mushroom cultivation in the country, its economics and its potential as a part time or full time agri-business in western Himalayan region.