The invention discloses a method of utilizing cassava dregs to produce alcohol and cultivate edible fungus, which is characterized in that after the cassava starch dreg is dried in the sun or squeezed and baked, mixing with material, steaming, first cooling, saccharifying enzyme, secondary cooling and adding yeast, pit fermentation and distilling in steam cooker is carried out, then firstly the thin alcohol produced is stored in a rectifying column, distilled and cooled for producing end product alcohol; secondly the cassava starch dreg after distillation in steam cooker is cooled, prepared and fermented secondarily to become the nutritious culture medium of edible fungus, then strain of good quality is inoculated into the culture medium to cultivate organic product of edible fungus. The invention is a method of carrying out the intensive processing of the cassava dregs and realizing the multipurpose utilization of one material and making waste profitable as well as developing circular economy, and has the advantages of solving the environmental pollution problem from starch pulp, saving food resources, the low production cost, realizing the circular economy, having many kinds of cultivated edible fungus, not adding any fertilizer and meeting the green food standards, and being especially suitable for the wide range and large scale planting of Agaricus bisporus.