Mushroom production in India has registered a considerable growth in the recent times. However, cultivation of shiitake mushroom, which represents a major share at a global level, is still at a primitive stage in the Indian subcontinent. The scarcity of raw materials and the cost of energy for substrate sterilization are the major hurdles for a large-scale production. The present study delves into the possibility of growing shiitake mushroom on lignocellulosic biomass (saw dust and wheat straw) processed with different heat treatments to develop a cost-effective production technology. Six different strains of shiitake mushroom, viz., DMRO-35, 51, 297, 388s, 410, 412, were used in this study. The substrates were exposed to a pasteurization temperature of 80 ± 5°C in a bulk pasteurization chamber for three different times (H1–H3) and also to a high-pressure sterilization (H4) in an autoclave. DMRO-388s was found to be the most productive strain, irrespective of the substrate and heat treatment method used. Significant differences were observed in the biological yield depending on the type of substrate and heat treatment. Changes in the biochemical composition of the lignocellulosic residues in three different stages, viz., pre heat treatment, inoculation and primordial formation stages, were recorded. Changes in heat treatment levels and duration significantly altered the cellulose/lignin ratio of the growing substrate. High-pressure sterilization aided the rapid degradation of lignin in the substrate and increased its bioavailability, thereby facilitating the fungus achieving its potential yield. A significant correlation in the positive direction between the yield levels of the tested strains and the consumption of lignin in the growing substrate was found, suggesting the significance of pre heat treatment for the bioconversion of lignin and its subsequent utilization in the solid-state fermentation process. The substrate pre heat treatment under high-pressure sterilization was proved to be beneficial to obtain the maximum yields of shiitake mushroom.