Natural colorants, mostly of plant and fungal origins, offer advantages over chemically synthetic colorants in terms of alleviating environmental pollution and promoting human health. The market value of natural colorants has been increasing significantly across the globe. Due to the ease of artificially culturing most fungi in the laboratory and in industrial settings, fungi have emerged as the organisms of choice for producing many natural colorants. Indeed, there is a wide variety of colorful fungi and a diversity in the structure and bioactivity of fungal colorants. Such broad diversities have spurred significant research efforts in fungi to search for natural alternatives to synthetic colorants. Here, we review recent research on the genetic and environmental factors influencing the production of three major types of natural fungal colorants: carotenoids, melanins, and polyketide-derived colorants. We highlight how molecular genetic studies and environmental condition manipulations are helping to overcome some of the challenges associated with value-added and large-scale productions of these colorants. We finish by discussing potential future trends, including synthetic biology approaches, in the commercial production of fungal colorants.