Peri-urban cultivated areas of many cities in Pakistan are being irrigated from municipal and /or industrial wastewater since long. Soil samples were collected from two villages of Faisalabad (Jappaywala and Kajle), three of Rawalpindi districts (Dahgal, Gorakhpur and Sihala) and from the campus of Fatima Jinnah Women University, Rawalpindi (FJWUR) for investigating the status of heavy metals, fungal diversity, and fungal tolerance to heavy metals. There was marked differentiation among the soils for various heavy metals (Zn, Pb, Cd, Ni and Co) and fungal diversity. Forty-one fungal species among the 37 genera were found in these soils. The most common fungal strains viz, Aspergillus niger, Aspergillus sp, Fusarium sp, and Penicillium sp, were tested for tolerance against the heavy metals Zn, Pb, Ni and Cd. The degree of tolerance was measured by minimum inhibitory concentration (MIC) in the presence of the each metal and it was compared with control containing no heavy metals. Among the isolated fungal strains of all locations Aspergillus niger was the most tolerant against all the tested heavy metals. It exhibit strong radial growth from 0-40ppm followed by Aspergillus sp, Pencillium sp, and Fusarium sp against all the tested heavy metals. Thus the heavy metals tolerant fungus Aspergillus niger has shown a high level of tolerance to all metals tested, which makes it attractive potential candidate for further investigation regarding its ability to remove metals from contaminated soil.