L-Ergothioneine (L-EGT), a histidine-derived compound widely present in edible mushrooms, certain legumes, and animal offal, is an exogenous nutrient that cannot be endogenously synthesized in humans and must be obtained through dietary intake. In 2016, L-EGT was approved as a novel food ingredient by the European Food Safety Authority (EFSA) and is regulated as "Generally Recognized As Safe" (GRAS) in the United States. This systematic literature review comprehensively summarizes current research on its safety and functional efficacy. Regarding safety evaluation, L-EGT has demonstrated favorable safety profiles across various toxicological assessments including acute, subacute, subchronic, chronic, reproductive/developmental, and genotoxicity studies in animal models, as well as human clinical trials, with a chronic no-observed-adverse-effect level (NOAEL) established at 800 mg/kg body weight. Functionally, L-EGT exhibits multiple significant biological activities, including cognitive function improvement, metabolic disorder regulation, organ toxicity mitigation, skin-whitening and anti-aging effects, reproductive and developmental function enhancement, as well as skeletal health and exercise performance promotion. Additionally, it demonstrates potential biological roles in tumor prevention, immunomodulation, and sleep regulation. In conclusion, current scientific evidence indicates that L-EGT is safe at appropriate dosage levels and possesses diverse functional benefits, suggesting substantial application potential in the food industry and related fields. This review provides a scientific foundation for further development and translational applications of L-EGT.