Dig up the sod in the area of the fairy ring. Press a shovel into the ground one foot outside the mushrooms and work your way all around and through the center, removing the sod.
Remove the dirt from the exposed area to create a hole 1 foot deep. Place the dirt in garbage bags for disposal, making sure not to spill any on the lawn.
Pour fresh dirt or potting soil in your former fairy ring mushroom area. There should be enough dirt that the ground is level with the surrounding area.
Apply fertilizer to the soil. Use a starter fertilizer that has an NPK ratio of 5-10-5 at a rate of 20 lbs. per 1,000 square feet. Work the starter fertilizer into the first 2 to 4 inches of soil.
Broadcast grass seed over the bare area. Cover the grass seed with 1/8 inch of compost or soil. Water the area.