In one embodiment, the process combines a fraction (up to 15%) of a lignocellulose substrate with supplemental nutritional material and hydrates the fraction to a moisture content of from 40% to 70% by weight. The hydrated substrate fraction is heat processed to remove ambient bioburden (yeast, mold, bacteria) and to maintain the hydrated substrate fraction in an aseptic condition. Thereafter, the hydrated substrate fraction is inoculated with a fungus and incubated to obtain a myceliated substrate which is then reduced into discrete particles. The remaining fraction of the substrate is combined with water and then combined with the discrete particles of myceliated substrate and incubated to obtain a second myceliated substrate which is then reduced into discrete particles. The second myceliated substrate is combined with supplemental nutritional material and incubated to obtain a third myceliated substrate composed of at least 10% mycelium.