Fungi play a crucial role in nutrient cycling by breaking down organic matter, such as dead plants and animals, into simpler compounds. This decomposition process releases nutrients like carbon, nitrogen, and phosphorus back into the soil, making them available for other organisms to use. Additionally, fungi form symbiotic relationships with plants, such as mycorrhizae, where they help plants absorb essential nutrients from the soil. Overall, fungi facilitate the recycling of nutrients in ecosystems, contributing to the health and productivity of the environment.