Fungi play an essential role in the nutrient cycle by acting as decomposers. They break down organic matter, recycling nutrients back into the ecosystem. Through decomposition, fungi contribute to soil health by producing humus, enriching the soil with nutrients necessary for plant growth. They also form mutualistic relationships with plants, such as mycorrhizae, aiding in nutrient exchange. Understanding the role of fungi is crucial for maintaining biodiversity and soil fertility, which supports ecosystem health.