Lentinus squarrosulus (Mont.) is an edible wild mushroom with tough fruiting body that belongs to the family Polyporaceae. It is used in ethnomedicine for the treatment of ulcer, anaemia, cough and fever. Recent studies have demonstrated its anticancer, anti-diabetic and antioxidant properties. However, little or no information is available regarding the bioactive components and toxicological study of wild dried L. squarrosulus. Therefore, this study investigated the bioactive components of aqueous extract of boiled wild dried L. squarrosulus and its toxicological effects in rats. The extract of L. squarrosulus was subjected to GC-MS analysis. The acute toxicity test was performed by oral administration of a single dose of up to 5,000 mg/kg extract of L. squarrosulus. In subacute study, the rats were orally administered extract of L. squarrosulus at the doses of 500, 1,000 and 1,500 mg/kg body weight daily for 14 days. The haematological, lipid profile, liver and kidney function parameters were determined and the histopathology of the liver and kidney were examined. The GC-MS analysis revealed the presence of bioactive compounds; 1-tetradecene, fumaric acid, monochloride, 6-ethyloct-3-yl ester, 9-eicosene, phytol, octahydropyrrolo[1,2-a]pyrazine and 3-trifluoroacetoxypentadecane. In acute toxicity study, neither death nor toxicity sign was recorded. In the sub-acute toxicity study, significant differences (p < 0.05) were observed on creatinine, aspartate aminotransferase, alanine aminotransferase, total cholesterol, triglycerides and high-density lipoprotein cholesterol. Whilst no significant differences (p > 0.05) were observed on packed cell volume, heamoglobin, red blood cell, white blood cell and alkaline phosphatase, in all the tested doses. No histopathological alterations were recorded. Our findings revealed that aqueous extract of L. squarrosulus may have antimicrobial, antinocieptive and antioxidant properties based on the result of GC-MS analysis. Results of the toxicity test showed no deleterious effect at the tested doses, suggesting that L. squarrosulus is safe for consumption at the tested doses.