Effects of CO₂ concentration (500, 800, 1,000 and 1,500 ppm) on the initiation and development of fruit body of Grifola frondosa on sawdust cultivation were studied. Optimum concentrations of carbon dioxide for the initiation and development of the fruit body showed the ranges from 500 to 800 ppm. Fruit body initiation was accelerated at lower than 800 ppm CO₂ exposure but the maturing of the fruit body was not influenced by above treated CO₂ concentrations. The higher ratio of primordial formation, faster fruit body initiation and higher yield were obtained at below 800 ppm of CO₂ level, whereas over 1,000 ppm of CO₂ levels showed abnormal and lower quality of fruiting bodies. Based on the above results, it is concluded that the favorable CO₂ level for bag culture of G. frondosa was below 800 ppm.