Add onions and saute 1 to 2 minutes until translucent and starting to soften. Add garlic and stir 30 seconds to 1 minute until fragrant. Add mushrooms and saute about 5 minutes until water from the mushrooms has released and begins to evaporate.
Add crushed tomatoes, 1/2 cup water, bay leaf, salt, and pepper. Lower heat to low and simmer 20 to 30 minutes.
The longer you simmer the sauce, the deeper and richer the flavor becomes.