Paddy straw mushroom typically thrives in warm, moist climates and is often found in Asian countries. It grows on decaying organic matter, such as straw of paddy, which is why it gets part of its common name. Ideal cultivation occurs in fields where rice straw is abundant, as it provides the necessary substrate for growth. Paddy straw mushroom can also be cultivated artificially in similar conditions, requiring high humidity and temperatures between 30 to 35 degrees Celsius.