Spent mushroom substrate was transformed into mycelium-based boards with flexural strength up to 36.60 MPa and low thermal conductivity of 0.07 W/(m·K), meeting building material standards without chemical additives. Dry processing produced stronger boards, while wet processing reduced water absorption to ~30%, improving durability and dimensional stability. Mycelium acted as a natural binder, forming hydrogen bonds with cellulose to create scalable, biodegradable alternatives to wood-based materials.