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Edible white-rot mushrooms are organisms that are cultivated at an industrial scale using wood-based substrates. The mushroom industry has an estimated annual production of 34 Mt of edible mushrooms, and approximately 70 wt% of the substrate is left as waste known as spent mushroom substrate (SMS). The huge volumes of SMS generated by mushroom farms hinder proper recycling, meaning that combustion or open-field burning are common disposal practices. This paper shows a concept that could help reduce the environmental impact of the mushroom industry. SMS from the cultivation of shiitake mushroom was used as a carbon precursor for the production of nitrogen-doped activated biochar that was used to remove reactive orange-16 (RO-16) azo dye from water, as well as contaminants from two synthetic effluents and real sewage water. Melamine was used as a nitrogen dopant and phosphoric acid as an activating agent. Samples without the addition of melamine were used for comparison. The doping/impregnation process was carried out in one-step, followed by pyrolysis at 700 and 900 °C for 1 h. BET, Raman spectroscopy, X-ray photoelectron spectroscopy (XPS) and scanning electron microscopy (SEM) were used for the characterization of the biochars. The specific surface area of the doped samples was slightly lower, i.e., 1011 m²/g (SMS-700 °C), 810 m²/g (SMS-700 °C + N), 1095 m²/g (SMS-900 °C), and 943 m²/g (SMS-900 °C + N). Raman spectroscopic analysis showed that the N-doped biochars had more defective carbon structures than the non-doped ones. XPS analysis showed that doping with melamine led to the formation of N-functionalities on the surface of the biochar particles. The kinetics of adsorption were well represented by the Avrami model. The adsorption isotherms were well-fitted by the Liu model. The maximum adsorption capacities (q_max) of RO-16 were much higher for the N-doped biochars, i.e., 120 mg/g (SMS-700 °C), 216 mg/g (SMS-700 °C + N), 168 mg/g (SMS-900 °C), and 393 mg/g (SMS-900 °C + N). N-doped biochar samples were more effective for the removal of contaminants from synthetic effluents and sewage water. N-doped biochar produced at 900 °C showed good recyclability. This work concludes that SMS is a valuable waste that could be used for the production of activated carbon and that N-doping helped to improve the adsorption performance to a great extent.