Bio-surfactants have a unique structure that makes them suitable and attractive for many purposes such as removing crude oil, pharmaceutical production, oil industry (MEOR), and food industry. Using microorganisms instead of chemical surfactants for bio-surfactant production is confirmed by many researchers. So far, many efforts have been made to find more potent microorganisms for bio-surfactant production and almost all of these researches have been conducted on bacterial species and yeasts. Present study was performed in order to molecular identification and evaluation of bio-surfactant production potential of a previously isolated edible paddy straw mushroom. Bio-surfactant production by this microorganism was screened using emulsification index (E24%), oil spreading activity, and surface tension tests. DNA sequencing showed that this fungous belongs to new species of Volvariella volvacea. Also, reduction in surface tension, emulsification index and oil spreading activity were 35.15 dyne/cm, 80% and 11 cm, respectively.