Mycotoxins comprises of various fungal toxins, many of which have been implicated as carcinogen to man and animals. There are four major classes of mycotoxins namely Aflatoxins, Zearalenone, Ochratoxins, and Fumonisins. Among them Aflatoxins are the most toxic and carcinogenic compounds. Aflatoxin B₁ (AFB₁) has been defined as a potent carcinogen by the International agency for research on cancer (IARC) and is the most deadly toxin among the other aflatoxins present. AFB₁ is produced mainly by Aspergillus flavus and Aspergillus parasiticus. These toxins are commonly found in developing countries such as Africa, India and Southeast Asia. The level of contamination is found high in cereals, dried fruits and peanuts that are used as food and feed. Even small quantity leads to cumulative effect and poses threat to human and animal health. This leads to the use of new technologies for testing hazardous foods. Physical, Chemical and Biological methods have be adopted for degradation of AFB₁, but large-scale, practical and cost-effective methods for detoxifying AFB₁ containing feedstuffs are currently not available. This review deals with the potential hazards of AFB₁ in concern with prevention strategy for fungal contamination.