Spent mushroom substrate (SMS), a by-product of edible mushroom cultivation, is primarily composed of cellulose-rich materials derived from wood residues (1). For every kilogram of fresh mushrooms produced, approximately 4–5 kg of SMS is generated (2). While SMS has been previously explored for applications such as plant disease control (3) and bioenergy production (1), recent studies suggest its potential for fibrillation into fibrils, offering a sustainable alternative for material applications (4,5). During mushroom cultivation, the selective degradation of lignin naturally pretreats the substrate, without the need for chemicals. This study leverages this inherent biological pretreatment to fibrillate SMS using two different methods: a commercial blender (W) and a pilot-scale co-rotating twin-screw extruder (E). The fibrillated fibers were formed into sheets by vacuum filtration and compression molding. Furthermore, the sheets were immersed in a biopolymer resin based on starch and lignin in a ratio of 85:15 with citric acid used as crosslinker. Fiber morphology was analyzed using optical microscopy (OM) and scanning electron microscopy (SEM), while the sheet properties were evaluated from mechanical and contact angle measurements. OM and SEM analysis revealed that fibers from W contained some unfibrillated fibers, whereas fibers from E consisted of longer fibers. Mechanical testing showed that sheets containing the biopolymer exhibited increased tensile strength, suggesting enhanced fiber bonding. Contact angle measurements indicated that all sheets were hydrophilic; however, those incorporating the biopolymer retained water for over 60 s. Among the two fibrillation methods, E proved to be an energy-efficient method due to its continuous operation, shorter processing time, and ability to handle high solid content. Additionally, the biopolymer blend functioned as an adhesive, enabling the formation of rolled sheets into straws. These straws maintained their structural integrity for over 24 hours when immersed in water, demonstrating the high-value conversion potential of SMS application.