The world's second deadliest fungus, which can shrink a person's brain if eaten, has been found growing in Far North Queensland.

The Poison Fire Coral fungus is normally found in the mountains of Japan and Korea, but fungus photographer Ray Palmer recently stumbled upon the specimen in Cairns.

Matt Barrett, a mycologist from James Cook University, confirmed the identity of the fungus and warned people not to touch or eat it.

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"Of the hundred or so toxic mushrooms that are known to researchers, this is the only one in which the toxins can be absorbed through the skin," Dr Barrett said.

Just touching the Fire Coral fungus can cause reddening or swelling of the skin, Dr Barrett said, but eating it could prove fatal.

"If eaten, it causes a horrifying array of symptoms: initially stomach pain, vomiting, diarrhoea, fever and numbness, followed over hours or days by delamination of skin on face, hands and feet, and shrinking of the brain, which, in turn, causes altered perception, motion difficulties and speech impediments," he said.

Several people have died in Japan and Korea after mistaking the fungus for an edible mushroom and brewing it into a tea for medicine.

Dr Barrett said the fungus grew on tree roots and likely occurred naturally in Cairns. There have also been reported instances of the fungus growing in Papua New Guinea and Indonesia, he said.

"This record extends the distribution of the fungus considerably, and it may be even more widespread in tropical Australia," he said.