Cordyceps militaris is widely used in China, Korea, and other Asian countries as both a traditional medicinal ingredient and an edible fungus. This study aimed to optimize the growth conditions and fruiting body production of C. militaris by investigating various culture media and physical parameters such as pH, aeration, illumination, temperature, spawn materials, and oat–sawdust-based substrate formulations. After a 7-day incubation period, oats with a pH of 6.0, under sealed and illuminated conditions at 32°C, demonstrated the most effective mycelial growth. Substrates consisting of 70% oat and 30% sawdust had the shortest incubation time of 30.5 days for fruiting body formation. The basidiospores showed a typical germination pattern where the sporidium produced a single germ tube that elongated, and branched to form monokaryotic primary mycelia. In conclusion, using oats as a substrate in the cultivation of C. militaris could reduce production costs and help protect the environment.