Commercial cultivation of edible mushrooms utilizes a large amount of lignocellulosic material as a substrate. After harvest, the leftover substrate, referred to as a spent mushroom substrate (SMS), largely remains biochemically unaltered. In light of the global rise in the number of edible mushroom production facilities, it is pertinent to sustainably manage the by-products of the mushroom production process, particularly SMS. Following the principles of the circular economy, SMS has shown potential for a variety of applications: SMS can be used as substrate for a new cycle of mushroom cultivation or as animal feed, fertilizer, soil amendment, bioremediation agent or a substrate for renewable energy production such as biogas, bioethanol, biohydrogen, solid biofuel, bio-crude and bio-oil. This article summarizes the current state of knowledge in various applications, highlights recent developments in the field, discusses potential barriers and offers suggestions for the long-term growth of the mushroom industry worldwide.