Based on the analysis of the current situation of the edible mushroom industry in Shandong Province, the evaluation index system was constructed by the "diamond model", and factor analysis was applied to analyze the competitiveness of the edible mushroom industry in Shandong Province using cross-sectional data from 23 provinces across China. The results are as follows. The scale of the industry is the core advantage of the edible mushroom industry in Shandong Province; the market demand condition is the core factor affecting the competitiveness of the edible mushroom industry in Shandong Province in the future; compared with the strong edible mushroom producing provinces, there is still some room for improvement in the scale competitiveness of market demand and capital competitiveness of edible mushroom industry in Shandong Province. Therefore, the edible mushroom industry in Shandong Province should give full play to its scale advantage and continue to expand the scale of edible mushroom production; adhere to the market demand as the guide, effectively improve market demand; increase government financial investment and pay attention to human capital investment.