Oyster mushroom (OM) cultivation generates residue that needs to be managed; otherwise, it will be converted into waste. One of the substrates for OM cultivation is the food industry by-product, e.g., a mixture of the brewer’s spent grain (BSG) and wheat bran. This study assesses the OM cultivation residue’s physical and nutritional characteristics as a potential upcycled food ingredient and also considers developing bread from this cultivation residue. The OM was cultivated in a mixture of 55% BSG and 45% wheat bran. After the OM harvest, the cultivation residue (mixture of BSG, wheat bran and mycelium) had a lighter colour and a pleasant aroma compared to the initial substrate. It contained protein (10.8%) and had high niacin (42.4 mg/100 g), fibre (59.2%) and beta-glucan (6.6%). Thiamine, riboflavin and pyridoxine were also present in the cultivation residue. The bread was developed from 50% cultivation residue and 50% wheat flour, and its scores for darkness, dryness, sponginess, sour taste, bitter aftertaste, and aromatic aroma differed from white bread (p-value < 0.05). However, its overall acceptability and liking scores were not significantly different from white bread (p-value > 0.05). Therefore, this OM cultivation residue can be used as a nutritious ingredient; nevertheless, product development should be further explored.