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The study was aimed to enhance the nutritional quality of sponge cakes with oyster mushroom (Pleurotus sajor-caju). In this study, the physicochemical, functional, and sensory properties of cake supplemented with five different levels of mushroom powder (0 as control, 5%, 7%, 10%, and 12%) were evaluated. The results revealed that both hot air dried (HD) and freeze dried (FD) mushroom powder contained a higher amount of protein, fat, ash and fiber ontent compared with wheat flour used in cake, but the carbohydrate and moisture content showed the reverse trend. The study also found that increasing the level of fortification from 0% to 12% mushroom powder also increased the protein, fat, ash, and fiber content in the cake. FD mushroom powder significantly (p ≤ 0.05) recorded the highest protein (11.72% - 15.16%), fat (20.01% - 21.9%), ash (1.75% - 1.92%), and fiber (1.39% - 1.74%) with increasing the level of supplementation from 5% - 12%. In contrast, carbohydrate content of cake decreased from 34.13% - 31.15% with increasing the level of FD mushroom from 5% - 12%. Also, the volume and weight of the cake with FD mushroom were higher compared to HD and control sample. The results of sensory evaluation indicated that sponge cake with 10% FD oyster mushroom was rated the most acceptable after the control.