This study aimed at the development of a competitive and sustainable mycelium-based insulation material with low thermal conductivity. The investigated substrates were a) beech sawdust (SD), b) beech SD supplemented with further nutrients, c) spent mushroom substrate (SMS) as well as d) SMS supplemented with further nutrients. Substrates have been inoculated with Ganoderma lucidum or Trametes versicolor. Irrespective the substrate supplied, T. versicolor showed an overall good growth performance with a mycelial growth rate of 7.4–11.8 mm day⁻¹. The mycelial density was in the range of 190–200 kg m⁻³ and the handling properties of were overall good. G. lucidum did grow on SD-based substrates at a mycelial growth rate between 5.9 and 6.9 mm day⁻¹. Conversely, SMS inhibited the growth of G. lucidum. Results revealed that T. versicolor can effectively recycle SMS and G. lucidum SD-based substrates into lightweight materials with a low thermal conductivity (0.06–0.07 W m⁻¹∙K⁻¹).