Currently, the food and agricultural sectors are concerned about environmental problems caused by raw material waste, and they are looking for strategies to reduce the growing amount of waste disposal. Now, approaches are being explored that could increment and provide value-added products from agricultural waste to contribute to the circular economy and environmental protection. Edible mushrooms have been globally appreciated for their medicinal properties and nutritional value, but during the mushroom production process nearly one-fifth of the mushroom gets wasted. Therefore, improper disposal of mushrooms and untreated residues can cause fungal disease. The residues of edible mushrooms, being rich in sterols, vitamin D2, amino acids, and polysaccharides, among others, makes it underutilized waste. Most of the published literature has primarily focused on the isolation of bioactive components of these edible mushrooms; however, utilization of waste or edible mushrooms themselves, for the production of value-added products, has remained an overlooked area. Waste of edible mushrooms also represents a disposal problem, but they are a rich source of important compounds, owing to their nutritional and functional properties. Researchers have started exploiting edible mushroom by-products/waste for value-added goods with applications in diverse fields. Bioactive compounds obtained from edible mushrooms are being used in media production and skincare formulations. Furthermore, diverse applications from edible mushrooms are also being explored, including the synthesis of biosorbent, biochar, edible films/coating, probiotics, nanoparticles and cosmetic products. The primary intent of this review is to summarize the information related to edible mushrooms and their valorization in developing value-added products with industrial applications.