Luminous fungi have long attracted public attention in Japan, from old folklore and fiction to current tourism, children’s toys, games, and picture books. At present, 25 species of luminous fungi have been discovered in Japan, which correspond to approximately one-fourth of the globally recognized species. This species richness is arguably due to the abundant presence of mycophiles looking to find new mushroom species and a tradition of night-time activities, such as firefly watching, in Japan. Bioluminescence, a field of bioscience focused on luminous organisms, has long been studied by many Japanese researchers, including the biochemistry and chemistry of luminous fungi. A Japanese Nobel Prize winner, Osamu Shimomura (1928–2018), primarily focused on the bioluminescence system of luminous fungi in the latter part of his life, and total elucidation of the mechanism was finally accomplished by an international research team with representatives from Russia, Brazil, and Japan in 2018. In this review, we focused on multiple aspects related to luminous fungi of Japan, including myth, taxonomy, and modern sciences.