Pour sterilized sawdust into a clear plastic bag. Add enough distilled water to the bag so that the sawdust is slightly damp, but not moist all the way through. Pour in about 1/4 cup of gypsum for added nutrition.
Add mushroom spawn to the bag. Liquid and granular spawn can just be poured onto the sawdust substrate, but if you bought the solid, puck-shaped spawn, you will need to break it up into small pieces and scatter it over the sawdust. Shake the bag up and down a few times to incorporate the spawn and substrate.
Water the substrate and spawn mixture so that it is moist all the way through. Sawdust is very absorbent, so don't be afraid to water heavily. It is very difficult to overwater sawdust. Roll down the top of the bag and tape it down. Some air circulation is good, so don't worry about making a tight seal.
Cut the bag with a razor or sharp knife to make several 2- to 3-inch cuts all over the bag. Place the bag in a room with an average temperature between 70 and 80 degrees Fahrenheit and about 80 percent humidity. Garages, cellars and attics usually work best for mushroom growing. If none of these rooms has 80 percent humidity, invest in a humidifier for the room.
Let the bag sit in the room for about one to two weeks so that the mycelium can form. Mycelium is a gooey, white substance that indicates that the mushrooms are growing. After the mycelium forms, mist the bag with a spray bottle every day to keep the substrate moist. Harvest your mushrooms one to three months after the mycelium forms.