Bread waste represents a significant fraction of organic waste in Europe, creating both environmental challenges and opportunities for valorization. Solid-state fermentation (SSF) with filamentous fungi is a proven approach for upcycling such residues into protein-rich biomass. This study aimed to utilize SSF with the edible fungus Neurospora intermedia to convert stale bread into a mycelium-bread product with enhanced nutritional qualities for potential applications in both human food and animal feed. A five-day solid-state fermentation was optimized by systematically varying key environmental parameters (temperature, substrate moisture, and relative humidity). The product generated under optimal conditions was then subjected to a comprehensive nutritional analysis, including its amino acid and fatty acid profiles and mineral content, to evaluate its potential for food and feed applications. Under optimal conditions (30 °C, 60% initial moisture and 50% relative humidity, the crude protein content of the mycelium-bread product increased from 12.2 g/100g dry matter (DM) in the initial bread to 34.8 g/100g DM. The nutritional profile of the optimized product was substantially improved, featuring a marked increase in the essential amino acid lysine and the bioconversion of starch (from 61.6 to 1.44%) into 15.2 g/100g DM of functional fungal fiber. Moreover, a substantial improvement was observed in the lipid quality, evidenced by the PUFA/SFA ratio increasing from 0.72 to 2.10 after the fermentation. This study highlights the potential of SSF using N. intermedia to upcycle organic residues such as stale bread into a sustainable protein source with multi-nutrient potential for food and feed applications.