To grow mushrooms on wood, you need to start off choosing between one of two options: 

• Either pick out the species of mushrooms you want to grow and order yourself a mushroom growing log from a supplier. 
• Or if you live close to the woods and know what trees you have around your area that you can harvest logs from, then you can decide what mushrooms would be suitable candidates for growing on your logs.

A log should average 4 to 8 inches in diameter (could be more or less) and be roughly 3 feet long.  When you have your log you will need to the following:

• Drill holes into the log about 6 to 8 inches apart, working in rows, and 1 inch deep.  The bigger the log’s diameter, the more rows you will have.
• Place inoculated mushroom plugs into the drilled holes, which you can obtain from a supplier unless you make your own.
• Seal all the holes with the plugs in them using wax, either cheese or candle wax would be acceptable.  The purpose here is to protect the mycelium or spawn from insects and contaminants and to prevent it from drying out, effectively killing it as well.

Your log is now prepared.  From this point on, you will need to keep the log under favorable conditions to encourage the log to start fruiting.  The log should be kept in an area where it receives indirect light and should be kept moist.  Learning how to grow mushrooms can be a very rewarding experience.  Your log should fruit about every 5 to 7 weeks, enjoy the harvest!

This post via the: How To Grow Mushrooms blog where you can learn how to grow mushrooms at home, indoors or outdoors