Diversity of Indian fermented foods is related to diversity of ethnicity with unparallel food culture of each community. More than 1000 types of major and minor ethnic fermented foods and alcoholic beverages are produced either naturally or by adding mixed starter cultures using indigenous knowledge of food fermentation in India. Diversity of microorganisms ranges from mycelia fungi to enzyme-producing to alcohol-producing yeasts and Gram-positive and few Gram-negative bacteria with several functional properties. Functional microorganisms play important roles in the traditional fermentation processes by their functional properties enhancing several health-promoting benefits to the consumers such as biopreservation of perishable foods, bioenrichment of nutritional value, protective properties, bioavailability of minerals, production of antioxidants, antimicrobial activities, non-production of biogenic amines, and probiotic properties. Microbial diversity in ethnic fermented foods contributes significant genetic resources due to diverse food cultures of the multiethnic groups of people in India. It has been noticed that consumption of few uncommon ethnic foods is declining in many states of India due to change in lifestyle, shifting from cultural food habit to commercial foods and fast foods effecting drastically on traditional culinary practices, and also due to climate change in some places.