The aim of this study was to explore a cost-effective method for the mass production of Bacillus thuringiensis (Bt) by solid-state fermentation. As a locally available agroindustrial byproduct, spent mushroom substrate (SMS) was used as raw material for Bt cultivation, and four combinations of SMS-based media were designed. Fermentation conditions were optimized on the best medium and the optimal conditions were determined as follows: temperature 32°C, initial pH value 6, moisture content 50%, the ratio of sieved material to initial material 1:3, and inoculum volume 0.5 ml. Large scale production of B. thuringiensis subsp. israelensis (Bti) LLP29 was conducted on the optimal medium at optimal conditions. High toxicity (1,487 international toxic units/milligram) and long larvicidal persistence of the product were observed in the study, which illustrated that SMS-based solid-state fermentation medium was efficient and economical for large scale industrial production of Bt-based biopesticides. The cost of production of 1 kg of Bt was approximately US$0.075.