This review assessed the feasibility and effectiveness of chemical sterilization methods as alternatives to conventional physical sterilization methods, with a specific focus on mushroom substrate preparation. Physical sterilization methods, such as autoclaving, provides excellent sterilization efficacy, but are resource-intensive and costly, limiting accessibility for small-scale mushroom growers. This review systematically examined recent research on chemical sterilization agents, notably hydrogen peroxide (H2O2) and chlorine dioxide (ClO2), focusing on sterilization efficacy, biological efficiency (BE), residual toxicity, and environmental sustainability (Life Cycle Sustainability, LCS). The results indicated that H2O2 and ClO2, at relatively low concentrations, achieved significant microbial reduction while maintaining mycelial growth and yields comparable to those obtained with physical sterilization. However, further research is required to address the issues related to species-specific sensitivity and chemical residue safety. The development of biodegradable natural sterilizing agents and establishment of practical field guidelines are recommended to enhance the applicability of chemical sterilization methods in mushroom farming.