Mushrooms are important organisms because of their human nutritional and medicinal value. With the expansion of the cultivation of edible mushrooms, fungal diseases have become a major problem in limiting their production. Numerous fungi can cause mushroom deformation or rots. In this publication we report on fungal diseases found during Morchella cultivation in China, with emphasis on morphology and phylogeny to characterise species. The key findings include 1) establishment of a new family Albomorchellophilaceae in Hypocreales, and a novel monotypic genus Albomorchellophila with the type species A. morchellae. Divergence time estimates indicate that Albomorchellophilaceae diverged from its sister family Calcarisporiaceae at ca. 105 (92–120) MYA; 2) the phylogeny and morphology of the family Pseudodiploosporeaceae (Hypocreales) is revised. The family contains a single genus Pseudodiploospora. Intraspecific genetic analyses of Pseudodiploospora longispora reveals significant base differences within strains, especially in the regions of protein-coding genes RPB 2 and TEF; 3) four fungicolous taxa, i.e., Cylindrodendrum alicantinum, Hypomyces aurantius, Hypomyces rosellus, and Trichothecium roseum, are reported as putative pathogens on cultivated morels for the first time. In addition, the previously reported pathogens of morels, Clonostachys rosea, Clonostachys solani, Hypomyces odoratus, and Pseudodiploospora longispora are also detailed in their symptoms and morphology; 4) the phylogeny and morphology of “Zelopaecilomyces” previously placed within Pseudodiploosporeaceae are re-assessed. “Zelopaecilomyces” is proved to be introduced through a chimerism of gene fragments sourced from two distinct organisms. Consequently, it is recommended that “Zelopaecilomyces” should not be recognised due to the mixed up molecular data in phylogeny and a lack of support from morphological evidence. Furthermore, this study discusses the voucher specimen Paecilomyces penicillatus (CBS 448.69), which may contain two mixed taxa, i.e., Pseudodiploospora longispora and a member of Penicillium. Publications on pathogenic fungi of cultivated mushrooms is sporadically, which leads to a lack of understanding of causal agents. As a follow up to the diseases of morel cultivation, we also review the fungal diseases of cultivated mushrooms reported over the last four decades. More than 130 pathogens affect the growth and development of the main cultivated mushrooms. The taxonomic diversity of these pathogens is high, distributed in 58 genera, 40 families, 20 orders, 12 classes and six phyla. The host infected are from Ascomycota to Basidiomycota, mainly being reported from Agaricus bisporus, Cordyceps militaris, Morchella spp., and Pleurotus spp. This study not only enriches our current knowledge on the diversity of pathogens of cultivated mushrooms, especially morels, but also recognizes the importance of some taxa as potential pathogens. Taxonomic investigation and accurate identification are initial and key steps to understanding pathogen-mushroom interactions, and will result in better disease management strategies in the mushroom industry.