Fungi play a critical role in the deterioration of ancient papyri due to their organic and hygroscopic nature. Fourteen fungal species belonging to five genera— Aspergillus, Cladosporium, Penicillium, Talaromyces, and Ulocladium—were isolated and identified from 20 Egyptian papyrus artifacts located at the Grand Egyptian Museum—Conservation Center (GEM-CC). The biodeterioration mechanism was evaluated by two analyses: cellulase enzyme activity and acid production assay. The isolated fungus P. lanosum showed potent biodeterioration power as it exhibited the highest enzymatic activity and could produce acid as well. Four different analyses were performed to assess the entity of the biodeterioration phenomenon: scanning electron microscopy, Fourier transform infrared spectroscopy, colorimetry, and pH measurements. The analyses demonstrated considerable changes in surface morphology, chemical structure (mainly represented by oxidation and hydrolysis of infected papyrus samples), darkness of the papyrus samples (ΔE 3.84–7.33), and pH (which dropped to 5.2 in the case of A. niger-infected sample. This article builds a preliminary perception for monitoring the biodeterioration of archaeological papyri and a trial for in vitro treatment to prevent further degradation, which may lead to loss of our valuable artifacts over a prolonged period.