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The Red Mushroom (not to be confused with Mushroom) is an in-game item that can be harvested from fully-grown large red mushrooms which drop around 2-4 red mushrooms.
Upon consumption, 2 hunger points are restored, the player's head grows and turns red and it heals the player for 30 health points. Red mushrooms early-game can be sacrificed for a good amount, but should be kept in storage late-game due to their unappealing nature to the gods and are better off being eaten for a mediocre hunger boost instead.
Along with hunger, 3 Red Mushrooms in an Alchemy Station can create a Jump Potion, which, when consumed, allows you to jump higher and lasts for a certain amount of time. (SealMaster50 guesses that it takes around 2 minutes for the effect to wear off. Use it wisely!)