The simulated ammonia nitrogen wastewater was treated with spent mushroom compost (SMC) in a laboratory bioreactor (LBR), and shifts in microbial diversity in LBR were conducted by polymerase chain reaction and denaturing gradient gel electrophoresis (PCR-DGGE). We found that the removal efficiencies of NH₄⁺-N and COD reached 73.4% and 61.7%, respectively, and that simultaneous nitrification and denitrification (SND) was observed during the process of NH₄⁺-N removal. In addition, we observed that there were no obvious changes in microbial diversity shifts, and that the predominant four isolates were identified as Flavobacterium johnsoniae, Sphinbacterium multivorum, Comamonas sp., and Rhizobium sp., which functioned together and played a critical role in treating simulated ammonia nitrogen wastewater in LBR. Overall, SMC could provide both carbon sources and indigenous functional microorganisms for nitrogen removal, indicating that SMC has potential for wastewater treatment.