The conventional method of mushroom cultivation can be labor-intensive and produce limited yields. Due to the humidity and temperature in the summer season, mushroom production is significantly diminished. The growth of each mushroom species depends on the consistency of care, the skill of experienced farmers, and crucial cultivation parameters such as temperature, humidity, irrigation, and exposure to sunlight. This study aims to implement an IoT-enabled cultivation system to control and monitor the environmental parameters of Indian mushroom cultivation within the proposed innovative framework, as compared to conventional methods. The IoT-based cultivation system consists of hardware components, circuit connections, software, and algorithms. This study confirms that consistent control of environmental parameters, such as temperature and relative humidity, by a dynamic climate promotes mushroom growth that is superior to conventional cultivation. Our findings reveal a substantial increase in the yield and quality of mushrooms, demonstrating the tangible advantages of applying an innovative approach. Traditional cultivation yielded an average of 4.118 kg, whereas IoT-based cultivation systems produced an average of 5.306 kg. The t-test statistic comparing yields has highlighted the significance of the observed differences with a p-value of 0.0000. The research contributions are to design and demonstrate the IoT-enabled system innovation with solar renewable energy, illustrating the effect of mushroom production and quality on the economic market analysis of mushroom cultivation in the direction of environmentally sustainable and green agricultural practices. This study’s comprehensive perspective can provide farmers, agricultural professionals, and policymakers with valuable insights regarding the future of mushroom cultivation, particularly the reduction of carbon emissions and energy consumption.