Commercial mushrooms are cultivated on lignocellulose wastes, such as corncob, saw dust, straw and wood chips. Following the rapidly increasing global mushroom production, the efficient recycling and utilization of the by-product, known as spent mushroom substrate (SMS) has garnered much attention due to the serious pollution issues caused. Embracing the concept of 'circular economy', the SMSs have demonstrated immense potential in wide range of applications, including recycling as the substrate for new cultivation cycle of mushroom, biofertilizer and soil amendment, animal feed, renewable energy production and pollution bioremediation. The review provided an overview and recent advances focusing on these applications, analyzed the possible challenges and proposed future directions for sustainable development of global mushroom industry.