Twelve white-rot fungal isolates were evaluated for their potential to produce mycelium leather from rice straw, based on growth characteristics, biomass production, and mechanical properties. Among these, Trametes sp. SW25-2 exhibited rapid growth on culture medium and dense mycelial formation on rice straw substrate. The effects of nutrient supplementation, substrate-to-medium ratio, and processing conditions on mycelium-leather formation were systematically examined. No significant differences were observed among different carbon (glucose, maltose, and sucrose) and nitrogen sources (yeast extract, peptone, and ammonium sulphate), indicating that the fungus effectively utilised rice straw as the primary substrate. An optimal ratio of 1 g rice straw to 10 mL culture medium (90.9% moisture content) enabled complete colonisation and the formation of a compact mycelial structure, achieving a maximum tensile strength of 2.78 MPa under optimised hot-pressing conditions (120 °C, 60 s, 1 MPa). Hot-pressing conditions significantly influenced material properties. A higher temperature (120 °C) increased tensile strength but reduced elongation at break, while a lower temperature (60 °C) produced more flexible materials. Scanning electron microscopy revealed that post-treatment and hot pressing transformed the mycelial network into a dense and cohesive structure. The resulting mycelium leather demonstrated suitable physical properties and was successfully fabricated into prototype products, highlighting its potential as a sustainable bio-based material derived from agricultural waste.