It is through the mycelium that a fungus absorbs nutrients from its environment. It does this in a two stage process. Firstly the hyphae secrete enzymes onto the food source, which breaks down polymers into monomers. These monomers are then absorbed into the mycelium by facilitated diffusion and active transport.
Mycelium is vital in terrestrial and aquatic ecosystems for its role in the decomposition of plant material. It contributes to the organic fraction of soil and its growth releases carbon dioxide back into the atmosphere. The mycelium of mycorrhizal fungi increases the efficiency of water and nutrient absorption of most plants and confers resistance to some plant pathogens. Mycelium is an important food source for many soil invertebrates.
Sclerotia are compact or hard masses of mycelium.
One of the primary roles of fungi in an ecosystem is to decompose organic compounds. Petroleum products and pesticides that can be contaminants of soil are organic molecules. Fungi therefore should have potential to remove such pollutants from the soil environment, a process known as bioremediation.
Mycelial mats have been suggested (see Paul Stamets) as having potential as biological filters, removing chemicals and microorganisms from soil and water. The use of fungal mycelia to accomplish this has been termed "mycofiltration", although there is no reason to suspect that the process is any different from that of bioremediation using fungi.
Some Mycelium has symbiotic property with many plants. This opens the door to soil supplementation to improve crop yields.
Mycelium, spread on logging roads acts as a binder holding new soil in place and preventing washouts until woody plants can be established.