The mushroom most likely to spring up in potted plants is commonly known as the flowerpot parasol (Lepiota lutea). This species of mushroom starts out a yellow color that fades to white or pale yellow. Lepiota lutea is 1 to 3 inches tall with a 1- to 2-inch cap. It may appear as a single mushroom or in clusters.
The Lepiota lutea mushroom breaks down dead organic matter in and on the soil. It will not harm the plant or soil, and removing the mushroom is not necessary for the health of the plant.
The Lepiota lutea mushroom is considered poisonous to people and animals. Iowa State University Extension suggests removing the mushroom from potted plants if there are pets and small children present.