An innovative and high-performance wheat straw-gypsum composite (SGC) was developed to solve the problem of cracking and separation caused by water release when exposed to high temperature of gypsum board (GB) on the fire side of a wall. Compatibility between wheat straw and gypsum crystal was improved by combined pretreatment (i.e., sodium hydroxide and coupling agent) and adding magnesite. The mechanical properties of SGC were investigated and its fire performance determined by cone calorimetry and fire tests. The results indicated that the modulus of rupture, modulus of elasticity, and internal bond strength of SGC were 53.7%, 115.9%, and 173.9%, respectively higher than the traditional GB. The improvement in strength was attributed to the fact that alkali-treated wheat straw was well combined with gypsum crystals through magnesite to form a compact structure, as evidenced by scanning electron microscopy. SGC had extremely low heat and smoke release rate, ignition point at > 1200 s, and mass retention increased by 17.1%, compared with the literature results of gypsum-based bio-composites. Under a 60-min duration exposure, the charring depth of the wood studs of light frame walls sheathed with GB was 27 mm higher than that of SGC wall, and the bearing capacity retention rate of SGC wall 65.4%, while that of GB wall was lost. Errors between the calculation of bearing capacity proposed in this study and test values were < 6%. SGC with superior thermal insulation and mechanical properties could beneficially replace GB as fire-resistant panels in buildings.