Expanding the utilization of bamboo shoots is extremely meaningful in China because of the high output every year. In this study, the bamboo shoot powder was used as a substrate to produce water-soluble dietary fiber (WSDF) by fermentation with a screened fungi strain Trichoderma dorotheae MLG23, and the prepared WSDF was utilized in the production of biscuits. The bamboo shoots and their residues, WSDF, and biscuits were analyzed on Fourier transform infrared spectroscopy (FT-IR), X-ray photoelectron spectroscopy (XPS), scanning electron microscope (SEM), inductively coupled plasma mass spectrometry (ICP-MS), and texture analyzer. The results showed that the fungi exhibited a strong ability to express extracellular cellulase. The enzymatic activities of filter paper activity (FPA), cellobiohydrolase (CBH), and ꞵ-glucosidase (BG) secreted by the strain showed the highest at 50 °C, reaching 0.13, 0.19, and 1.20 U/mL, respectively, and the highest enzymatic activity of endoglucanase (EG) with 0.37 U/mL was obtained at 60 °C. The highest WSDF yield of 45.97 wt% was obtained under the fermentation conditions of bamboo shoot loading 30 g/L, strain inoculum 1010 CFU/L, and fermentation time 4 d at 30 °C. The cellulose and hemicellulose in bamboo shoots were partially utilized by the fungi to produce WSDF. The main metal elements in WSDF were Mg, K, Ca, and Zn. The hardness, cohesion, chewiness, resilience, and adhesion of the biscuits showed a gradual decrease with the increase of WSDF addition in the range from 0 to 10 g per 100 g of low gluten flour. The incorporation of WSDF disrupted the network structure of the gluten, leading to the reduction of some textural properties and the change of microstructure. These results showed a potential utilization of bamboo shoot in production of WSDF and functional biscuits.