**Abstract**

The commercial production of mushrooms generates a co-product, a virtually inexhaustible supply of spent mushroom substrate (SMS). It represents an ideal growth medium for plants and plant disease suppressive quality. Here we discussed about the contaminated microbial flora of SMS, potential antifungal and plant growth promoting activities, the results of these findings were also discussed in relation to the usage of SMS as a potential product for organic farming. SMS contained moisture content 72%, EC 1.75 mmho.cm−1 and had pH of 6.1. The cellulose and hemicellulose content of paddy straw substrate were 30.25%, 23.18% and 15.31% dry weight respectively. Growth in terms of root and shoot weight of the seedlings of green gram, black gram, tomato and chili were significantly higher when grown in 60% SMS amended soil. Spent mushroom compost from *Pleurotus eous* used in this study harbored bacterial population including, *Bacillus* sp., *Clostridium* sp., *Pseudomonas* sp. and *E. coli*. Bacterial isolate B1 was identified as *Bacillus* sp., isolate B2 was identified as *Clostridium* sp., isolate B3 as *Pseudomonas* sp. and B4 as *Escherichia coli*. These bacterial strains showed significant antagonistic activity against soil borne pathogenic fungi viz., *Fusarium* sp., *Alternaria* sp., *Phytophthora* sp. and *Aspergillus* sp.

**Keywords:** SMS, *Pleurotus*, antifungal activity, contaminants
