Aflatoxins and ochratoxins are highly potent mycotoxins primarily produced by Aspergillus and Penicillium species, contaminating various agricultural commodities, especially cereals, nuts, and animal feeds. Chronic exposure to these mycotoxins is associated with liver cancer, immunosuppression, and developmental disorders, posing significant risks to public health and socioeconomic stability in numerous developing countries. Detoxification of mycotoxins has traditionally depended on physical and chemical methods, which exhibit limitations such as partial efficacy, nutrient loss, changes in food quality, high energy requirements, and environmental issues. Biological detoxification has recently garnered significant attention as a sustainable, safe, and eco-friendly alternative. This method utilises microorganisms, including bacteria, yeast, and fungi, along with their enzymes and metabolites, to transform mycotoxins into less toxic or non-toxic compounds, while maintaining the nutritional and sensory quality of food and feed. This review systematically analyses the recent advancements in the understanding of the microbiological and enzymatic mechanisms of aflatoxin (AFB) and ochratoxin (OTA) degradation. It emphasises the function of essential enzymes such as aldehyde dehydrogenase, amidohydrolase, carboxypeptidases, laccases, manganese peroxidases and oxidases, transforming AFB1 and OTA into less toxic compounds like AFD1, AFQ1, L-β-phenylalanine and OTα. Industrial applications of these enzymes in feed and food processing are discussed. Contemporary challenges, including incomplete degradation, the formation of unknown by-products, and the variability of enzyme performance across different food matrices, are reviewed. The review proposes strategic approaches to enhance biological detoxification efficiency. These insights provide a framework for developing scalable, safe, and effective biotechnology solutions to mitigate mycotoxin contamination in the global food chain.