You need to transplant each one into its own container, much larger than that one.They might be getting cramped.

I would give them more space, but also ease up on the watering as well.

I agree with watching the watering. My Jalapeños did that to me about a month ago. It seemed to me it was a combination of over-watering and low temperatures. I wouldn't water until the plants look like they need it, they'll get droopy leaves when they're ready. Do your plants get any heat at all?

Mushrooms growing, yellowing leaves, and what is probably fungus gnats... Sure sounds like overwatering. Cut way back on the watering and see how well they recover.

What direction is the window sill facing?

You should only have to water a container that small every 2 weeks, probably. Just wait til the soil is dry. As long as their not dead, they can be rescued.

Hi - thank you all for your help and advice.

So I've checked the soil under the surface and it's very damp. Initially when the leaves started turning yellow I mistakenly thought that they weren't getting enough water so made the problem worse.

I'm going to try not watering them for a while (I'll try a couple of weeks as suggested). I've also loosened some of the soil up a bit to make it easier for the water to evaporate.

The window is facing South-East so not ideal but the best one in the Apartment. I'm thinking of getting a grow lamp of some sort to help them out. How many hours of direct sunlight do they need? Or is the answer "as much as possible"?

We're in Virginia and so they peppers are pretty warm through the day particularly when in direct sunlight.

I guess it's fingers crossed now and see how they recover. I've been checking out a few of the pepper pictures on the board and am jealous - hopefully I'll be able to followup with some decent pepper pics of my own.

Thank you again.

South is ideal so you're not far off. Work with what you have. They should be getting enough light for their size.

Letting them dry is the best thing to do. If they don't show enough recovery, try replacing the soil. Saturating it too much doesn't do well for the nutrients.

Have you fertilized? If not, please do so.

Peppers don't need much fertilizer. They are probably too wet. A west window would be better this time of year. South windows don't get enough exposure(especially if you have eves on that side) as the sun has shifted north.

It was said "Peppers don't need much fertilizer."

Perhaps so. Especially for peppers in the garden.

To my way of thinking, OP has a crowd in a small container. Containers run short of fert in a relatively short time.