Chars were obtained from spent mushroom substrate (SMS) via pyrolysis. It was found that as the pyrolysis temperature increased from 400 to 700 °C, the char yield decreased from 45.10 to 33.79 wt.% and the higher heating value increased from 17.32 to 22.72 MJ/kg. The largest BET surface area (13 m2/g) was created at 500 °C. Hydrogen atoms were continuously lost during pyrolysis, whereas oxygen atoms were difficult to eliminate. Whewellite, calcite, lime, and quartz were the minerals in the chars, and their forms and crystallinity changed with changing pyrolysis temperature. Activated carbon with a BET surface area of 1023 m2/g and a total pore volume of 0.595 cm3/g was obtained from the char prepared at 500 °C. Its characteristics were studied by N2-adsorption, Fourier transform infrared spectroscopy (FTIR), and X-ray diffraction (XRD). The pyrolysis and KOH-activation processes were investigated by thermogravimetric analysis (TGA). The results showed that the pyrolysis of SMS occurred primarily between 217 and 375 °C and that the energies needed for the pyrolysis reactions were relatively low due to the prior mushroom cultivation. Furthermore, lignin was incompletely decomposed in the char prepared at 500 °C, and KOH suppressed tar evolution and reduced the energy needed to decompose the residual lignin during activation.