Abstract: The effect of composting spent mushroom substrates of Agrocybe aegirit on watermelon plug seedling was studied. Two grain sizes of 3-5 mm and less than 3 mm of spent mushroom substrates from Agrocybe aegirit were adopted in this experiment, they were composited with red mud for watermelon plug seedling based on different proportions and the differences of each index of watermelon seedlings with different substrates were analyzed. It turned out that the index such as seedling rate, dry matter accumulation and strong seedling showed a rising tendency with the increase of volume proportion of spent mushroom substrates of Agrocybe aegirit in composited substrate. While various indexes of watermelon seedlings decreased when the volume proportion of spent mushroom substrates in composited substrate exceeded 70%. The substrate was fit for plug seedling of watermelon when the volume proportion of spent mushroom substrates in composited substrate kept at 70%, and the spent mushroom substrates with small grain size were more conducive to the growth of watermelon seedling compared with composited substrate with large grain size. Therefore, the substrate through composting spent mushroom substrates of Agrocybe aegirit and red mud could be used for watermelon plug seedling, with small grain sizes (<3 mm) and the proportion of spent mushroom substrates: red mud as 7:3.