Farms, food processing facilities, numerous factories, and other industries are producing alarming amounts of agro-industrial waste, which necessitates immediate action to prevent the negative environmental effects of its disposal and incineration. The waste, which primarily comprises cellulose, hemicellulose, and lignin, collectively known as lignocellulosics, holds significant untapped potential for various agro-based applications and industrial processes. In particular, mushrooms use this waste as a substrate. By producing lignocellulolytic enzymes, mushrooms break down lignocellulosic substrates and utilize them in the formation of their fruiting bodies. Consequently, mushroom farming has emerged as a leading biotechnology strategy. It addresses and benefits from agro-industrial byproducts in environmentally friendly, and sustainable alternative approach. It biotransforms low-value agricultural byproducts into protein-rich nutritious foods that significantly enhances human health and contributes to the development of rural economies. Moreover, it serves as a bioremediation strategy that is less intrusive than other methods of environmental restoration. Recently, the substratum of mushrooms has been acknowledged as an invaluable source of biofuels and a plethora of enzymes that have significant vital functions in various industrial operations and are of substantial commercial value. This article offers a summary of recent scientific understanding regarding the mushroom substratum as a resource of industrially significant enzymes and biofuel.