15 YEAR OLD KOREAN FIR ,FOILAGE IS YELLOWING FROM THE TRUNK OUTWARDS,SURROUNDING AREA HAS LARGE RED AND WHITE CAPPED MUSROOMS IN CLOSE PROXIMITY.CAN THERE BE A CONNECTION.

Even if the toadstools are related to your tree, they are unlikely to be harmful - the ones to worry about are honey fungus, which are not as you describe, and usually appear where there's dead wood. Its quite possible that the toadstools you have are just the fruiting bodies of mycorrhizae which is beneficial to the tree, rather than harmful.

the only thing i would add to what bamboo has said is, could it be too wet for it, hence the fungi??

If it is losing leaves from inside it is most likely just normal leaf fall. Even evergreens have a lifespan for the leaves and seversal conifers last three years before falling.

I will add that firs are reasonably resistant to root fungal problems.

Toadstool - stem white? cap red with white flecks? typical fairy tale type with gnome sitting on top? Sounds like Fly Agaric (Aminita muscaria), harmless to your tree.

A word of caution: Do not eat these mushrooms - they are poisonous/halucenagenic.
Wash hands after handling.

These fungi were/are used by Siberian Shamen to comunicate with spirits.
Caribou love them. Is this the reason why Santa Claus's reindeer can fly?

Sorry, can't help with the yellowing leaves on your fir.
I hope this helps. If it doesn't, at least it gave you something to read ;-)