Mushrooms are a lot like icebergs. What you see is just a tiny part of what is going on below the surface. The mushrooms sprouting up in your lawn are just the tip of fungi that live deep under the soil and help decompose buried organic material. A lot of times they pop up where a tree used to be, living on the dead wood and roots that are still underground.
Now, there’s good news and bad news. The good news is that mushrooms won’t hurt the lawn, they’re just kind of unsightly. The bad news is that, for the most part, they will keep coming back until all the organic material below the surface is eaten up.
The best thing to do is pull out the mushrooms or mow over them as they pop up. Try to get to them while they’re small to prevent the spread of spores. Some gardeners recommend sprinkling a handful of garden lime around the mushrooms. This will raise the soil pH slightly and can inhibit growth of certain types of mushrooms. Limiting your watering in that area can help, too. Mushrooms and fungus thrive in hot, wet conditions, so letting your lawn dry out a little bit can slow their growth. But the main thing to do is wait for the fungus to do its thing. Once all the dead material beneath the soil has been totally decomposed, the mushrooms will disappear.
Sometimes mushrooms pop up in a circle called a Fairy Ring. A fairy ring doesn’t exactly hurt the lawn directly, but it can inhibit water flow to the soil, causing the inside of the ring to be green while the outside looks pale. For this, you can aerate and give the lawn a little extra water to penetrate the soil. CSU also recommend s using a little bit of dish soap to help water penetrate. You can also use a wetting agent like Colorado’s Choice WaterSaver or Revive.