This research was carried out with an objective of studying the existing mushroom value chain, identifying demand-supply gap, carrying out SWOT analysis to explore challenges, proposing action plan and presenting finally standard operating procedure for enhancing value chain effectiveness. Data was collected from 71 actors identified in the oyster mushroom value chain in Tumakuru Taluk, Karnataka State, India and analysed. Analysis showed that there were five different models of value chain, and the shortest value chain was the most profitable one. Based on the respondents' perceptions, mushroom cultivation offers many opportunities such as creating employment, improving economic condition and diet. Meanwhile they face challenges like, pest attack, hike in input materials' prices, lack of technical guidance during farming, finance support, inefficient marketing system. There is a need to address demand-supply gap, invest more in facilities and related research, integrate all the actors in value chain to enhance productivity.