These circles of mushrooms are called fairy rings and are fruiting structures of fungi produced when weather conditions become favorable - such as on warm, moist days. The mushroom-producing fungi develop on organic matter in the soil and produce pustules or fruiting structures that grow on the outer limits of the colony, causing a circular effect. Grass is often greener in the ring area because the fungus converts proteins of the thatch and soil organic matter into nitrogen.
The fairy ring is more unsightly than it is serious. It can, however, be an indicator that a thatch problem exists. You can reduce the number of mushroom fairy rings by picking off and discarding the toadstools or mowing them before they fully open to release their spores. There are no chemical controls for lawn mushrooms.
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