Fungi play a crucial role in nutrient cycling by breaking down organic matter, such as dead plants and animals, into simpler compounds. Through the process of decomposition, fungi release nutrients back into the soil, making them available for other organisms to use. Additionally, fungi form symbiotic relationships with plants, such as mycorrhizae, which help enhance the plant's ability to absorb nutrients from the soil. Overall, fungi play a vital role in recycling nutrients and maintaining ecosystem health.