Studies on fungal taxonomy and fungal diversity are crucial for a better understanding of the interactions between fungi and their habitats. To date, there is no published record on macrofungal diversity in Pulau Bidong, Terengganu. Therefore, this study aimed to identify macrofungi species found with their respective substrates and to determine the macrofungal diversity in the island. The study was conducted at two different occasions and comprised of two trails near Universiti Malaysia Terengganu Research Station in Pulau Bidong, Terengganu. Collectionof fresh macrofungi was made and additional data including host information, distinctive features of each fungal sample and several environmental parameters was also recorded. Fresh specimens were later observed and identified before being dried prior to storage. Overall, 65 macrofungal species with 2 unidentified species belonging to 21 families and 34 genera were recorded. Trail A and trail B recorded diversity index of2.67 and 3.14 for Shannon Index while Simpson index recorded 0.90 and 0.94 respectively. The macrofungal diversity was dominated by family Polyporaceae while rare species discovered were from family of Tricholomataceae, Hericiaceae, Stereaceae, Schizophyllaceae, Sclerodermataceae, Dacrymycetaceae, Tremellaceae, Russulaceae and Clavulinaceae. The most common macrofungal substrates was decayed branches while other macrofungal substrates found were decayed trunks and leaves, soil,termite mounds, and living tree. In conclusion, the macrofungal species were randomlydistributed with high diversity in both trails. Therefore, it is recommended that anincrease in sampling trips, sampling efforts and areas covered be provided to increase the number of macrofungal species discovered and accuracy of diversity studies in the future.