Agro-wastes, such as crop residues, leaf litter, and sawdust, are major contributors to global greenhouse gas emissions, and consequently a major concern for climate change. Nowadays, mushroom cultivation has appeared as an emerging agribusiness that helps in the sustainable management of agro-wastes. However, partial utilization of agro-wastes by mushrooms results in the generation of a significant quantity of spent mushroom substrates (SMS) that have continued to become an environmental problem. In particular, Shiitake (Lentinula edodes Berk.) mushrooms can be grown on different types of agro-wastes and also generate a considerable amount of SMS. Therefore, this study investigates the biotransformation of SMS obtained after Shiitake mushroom cultivation into biogas and attendant utilization of slurry digestate (SD) in tomato (Solanum lycopersicum L.) crop fertilization. Biogas production experiments were conducted anaerobically using four treatments of SMS, i.e., 0% (control), 25, 50, and 75% inoculated with a proportional amount of cow dung (CD) as inoculum. The results on biogas production revealed that SMS 50% treatment yielded the highest biogas volume (8834 mL or 11.93 mL/g of organic carbon) and methane contents (61%) along with maximum reduction of physicochemical and proximate parameters of slurry. Furthermore, the biogas digestate from 50% treatment further helped to increase the seed germination (93.25%), seedling length (9.2 cm), seedling root length (4.19 cm), plant height (53.10 cm), chlorophyll content (3.38 mg/g), total yield (1.86 kg/plant), flavonoids (5.06 mg/g), phenolics (2.78 mg/g), and tannin (3.40 mg/g) contents of tomato significantly (p < 0.05) in the 10% loading rate. The findings of this study suggest sustainable upcycling of SMS inspired by a circular economy approach through synergistic production of bioenergy and secondary fruit crops, which could potentially contribute to minimize the carbon footprints of the mushroom production sector.