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Spent mushroom substrate (SMS), a byproduct of mushroom cultivation, has gained increasing attention as a sustainable soil amendment in agricultural and horticultural systems. SMS provides a promising alternative to peat-based substrates and synthetic fertilizers, supporting circular bioeconomy principles and sustainable farming practices. This is particularly relevant in boreal regions, where soils are typically acidic, nutrient-poor, and subject to short growing season conditions, presenting both opportunities and challenges for organic inputs. This review synthesizes current research on the agronomic and environmental implications of SMS use in agriculture and horticulture, including its effects on seed germination, plant growth, crop yield, root development, soil structure, and disease suppression. From an environmental perspective, the use of SMS contributes to waste reduction by repurposing organic residues and replacing peat, a non-renewable resource with significant ecological costs. However, several hurdles remain, including high salinity, inconsistent composition, nutrient imbalances, and complex compounds difficult for plants to access, which can impede plant performance. While prior studies have explored SMS in isolated settings, a comprehensive evaluation across systems is lacking. This review addresses that gap by assessing current evidence, identifying limitations, and outlining future research needs to optimize the use of SMS and scale its adoption in sustainable farming.