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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 (<i>Lentinula edodes</i> 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 (<i>Solanum lycopersicum</i> 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 (<i>p</i> < 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.