Adsorption is a highly efficient method for treating dye wastewater, which has led to the investigation of inexpensive and effective adsorbents. The volume, cost-effectiveness, and availability of agricultural waste make it a suitable choice for dye adsorption. This study synthesized activated carbon using spent mushroom substrate (SMS-AC) as an inexpensive adsorbent. The SMS was subjected to thermochemical treatment to increase its ability to adsorb methylene blue dye. The adsorption behavior of SMS-AC was evaluated in batch studies, considering variables such as temperature, initial dye concentration, and adsorbent dosage. The experimental results were examined utilizing Langmuir, Freundlich, and Temkin isotherm models, as well as pseudo-first-order and pseudo-second-order kinetic models, at different temperatures. The results revealed that SMS-AC effectively absorbed methylene blue dye, demonstrating an adsorption capability of 23.75 mg/g. The Langmuir isotherm model accurately matched the actual results, suggesting the occurrence of monolayer adsorption. The pseudo-first-order kinetic model exhibited superior concordance with the data at 30 °C and 50 °C, but the pseudo-second-order model demonstrated greater precision at 40 °C. The results indicate that SMS-AC could effectively and economically remove methylene blue dye from wastewater, making it a promising adsorbent that is also ecologically benign. By using agricultural waste in this way, we not only deal with the problem of waste management but also fulfill ecological and economic needs. This offers a hopeful alternative for industrial uses and large-scale applications.