Cellulase is an enzyme has great industrial importance, it catalyzes the conversion of insoluble cellulose to simple, water-soluble products. Cellulases are produced from a wide variety of microorganisms including fungi and bacteria. The present study investigated to the production of extracellular cellulase enzyme by wild edible mushroom Lentinus squarrosulus. The mycellial culture was screened for enzymatic activity using Carboxyl Methyl Cellulose (CMC) as substrate. The result revealed a clear zone of inhibition in the agar plates. Extracellular cellulase activities were measured at different physical and chemical condition such as pH, temperature, days and substrate concentration. The highest cellulase production was obtained on the 5th day by measuring 1.9 mg reducing sugar of per ml enzyme activity per min. The optimum cellulase activity was recorded at pH 5 (2.070 mg/ml/min), 500 C temperature (2.83 mg/ml/min) and 1% CMC (1.91 mg/ml/min).This study revealed that L. squarrosulus has the ability to produce cellulase and it may be utilized as a source for the production of industrial cellulase.