Background During the mushroom production process, about one-fifth of the mushroom gets lost. The mushroom residues (MR) are rich in nutrients and can be utilized in diverse applications. Therefore, the goal of this research was to modify a local hammermill to improve the performance of chopping mushroom residues to be efficient used as a by-product. Results The experiments were conducted on a hammermill without and with six screen diameters, three drum rotational speeds, three feed rates, two average moisture content and two hammer rotation tracks (long–short). Then, chopper experiments were carried out with a focus on a specified size, power consumption and energy required. The findings of using any size screen offered little productivity since after a short time, the chopping MR was built blocks around the drum and blades. But using no screen gives these phenomena disappear. The chopping MR performed well in long track conditions, with a feeding rate of 700 kg/h, a drum speed of 300 rpm and moisture content of 43% . Conclusions The chopping operation had the best at feed rate of 700 kg/h, drum speed of 3000 rpm and 43% moisture content of which gave the appropriate MWD of 5.54 and 5.32 mm, consumed power of 1114.35 and 1189.125 W and required specific energy of 1.59 and 1.7 kW h/Mg for short and long tracks, respectively, and also largest mean weight diameter under such conditions due to a decrease in the amount of mushroom residues and an increase in their dryness, which increases the fragmentation impact of hammers on mushroom remnants.