Abstract Decomposition of plant matter is a key ecosystem process and considerable research has examined plant litter decay processes in freshwater habitats. Fungi are common inhabitants of the decomposer microbial community and representatives of all major fungal phyla have been identified within freshwater systems. Development and application of quantitative methods over the last several decades have firmly established that fungi are central players in the decomposition of plant litter in freshwaters and are important mediators of energy and nutrient transfer to higher trophic levels. Despite the critical roles that fungi play in carbon and nutrient cycling in freshwater ecosystems, there are notable differences in the types and adaptations of fungal communities between lotic and lentic habitats. These differences can be explained by the wide range of hydrologic, physical, chemical and biological conditions within freshwater systems, all of which can influence the presence, type, and activity of fungal decomposers and their impact on litter decomposition. This paper seeks to provide a brief overview of the types, adaptations, and role of fungi within lotic and lentic freshwater ecosystems, with a particular emphasis on their importance to litter decomposition and the key environmental conditions that impact their growth and decay activities. This discussion will specifically focus on fungal dynamics occurring on plant litter in forested headwater streams and emergent freshwater marshes, since published data concerning their role in these systems is considerably more abundant in comparison to other freshwater habitats.