The novel application of silica sol-gel to modify the hygroscopic properties of the mycelium-cellulose composites (MCC) was successfully demonstrated in this study. The MCCs are a promising low embodied carbon and sustainable construction material that can be produced from industrial cellulosic waste. The MCCs have comparable thermally insulative properties to fossil-based alternatives; however, the MCCs suffer from high water uptake rates. Two hydrophobic sol-gel coatings were produced with different silica sources, tetraethyl orthosilicate (TEOS) and sodium silicate (SS), and these were compared in this study. It was found that the SS sol-gel MCC had less water uptake with a change in mass of 3.8% in lower humidity environments (0–45% RH), whereas the TEOS sol-gel had a lower change in mass of 26.9% from (45–95% RH) compared to the MCC which had a change in mass of 8.2% and 48.5% respectively. This has shown that the novel use of sol-gel technology and mycelium-cellulose composites can decrease the water uptake of the MCC by 44.56%, which is a crucial first step for the wider utilisation of MCCs.