Increased understanding of the interactions between endophytic fungi and plants has led to the discovery of a new generation of chemical compounds and processes between endophytic fungi and plants. Due to the long-term co-evolution between fungal endophytes and host plants, endophytes have evolved special biotransformation abilities, which can have critical consequences on plant metabolic processes and their composition. Biotransformation or bioconversion can impact the synthesis and decomposition of hormones, sugars, amino acids, vitamins, lipids, proteins, and various secondary metabolites, including flavonoids, polysaccharides, and terpenes. Endophytic fungi produce enzymes and various bioactive secondary metabolites with industrial value and can degrade or sequester inorganic and organic small molecules and macromolecules (e.g., toxins, pollutants, heavy metals). These fungi also have the ability to cause highly selective catalytic conversion of high-value compounds in an environmentally friendly manner, which can be important for the production/innovation of bioactive molecules, food and nutrition, agriculture, and environment. This work mainly summarized recent research progress in this field, providing a reference for further research and application of fungal endophytes. Graphical abstract