Abstract: Bio-fermentation technologies can be expected to improve the suitability of pine sawdust as a growth medium for edible mushrooms. This study aims to reduce the turpentine content and phytotoxicity during pine sawdust fermentation. A composite microbial agent with Trichoderma harzianum RM80 and Bacillus thuringiensis FJ26 was also used to treat the pine sawdust in the experiment. A systematic assessment was implemented to determine the turpentine content, physicochemical properties, nutrient composition, enzyme activity, and seed germination index (GI) in the pine sawdust before and after fermentation. The results showed that the monosaccharides and easily decomposable sugars were rapidly utilized by microorganisms at the initial stage of fermentation. The high metabolic activity and biological heat also exhibited to rapidly increase the temperature in the composting materials. The minimum changes of temperature were found, as the fermentation progressed. The composting materials were also turned to increase aeration. Easily decomposable substances were reduced to decrease microbial metabolic activity. The results demonstrated that the composite microbial agent significantly reduced the turpentine content in the pine sawdust. Specifically, α-pinene decreased from (8.70 ± 0.09) to (1.67 ± 0.09) μg/g, which was 80% reduction. While β-pinene was undetectable, indicating a 100% reduction. The seed germination index increased to 94.52%, indicating a high degree of decomposition and low phytotoxicity in the pine sawdust. Furthermore, the mycelial growth of edible mushrooms showed that normal mycelial germination and higher growth rates were achieved in the fermented pine sawdust with the microbial agents, compared with the unfermented and natural ones. The inhibitory substances were significantly reduced in the fermented pine sawdust. A suitable substrate was then obtained for mushroom cultivation. The fermented pine sawdust comprised up to 95% of the cultivation substrate. The microbial proliferation and the decomposition of organic matter produced organic acids during the initial stages of fermentation, thus lowering the pH. The organic acids volatilized and nitrogenous organic substances were produced, as fermentation progressed, thus promoting ammonia formation. There was an increase in the pH of the substrate. Subsequently, the content of ammonium nitrogen rose as well. Additionally, there was a positive correlation between the activities of hemicellulase, neutral xylanase, and mannanase during fermentation. There was some variation in the turpentine content. Neutral xylanase showed the greatest contribution rate, indicating that microorganisms predominantly utilized hemicellulose during the fermentation of pine sawdust. Furthermore, the activity of neutral xylanase also played a crucial role during fermentation. The theoretical support was provided to optimize the fermentation process. In conclusion, this finding can provide significant scientific evidence and technical support for the effective utilization of pine sawdust and the sustainable development of the edible mushroom industry. The recycling of waste biomass resources was promoted in the green development of the mushroom industry. These findings can also enhance the application of bio-fermentation technology in mushroom cultivation, thus improving production efficiency and quality in the ecological and sustainable development of the entire industry chain. A scientific basis can be offered to optimize the bio-fermentation.