The 650sq m expansion at the company's site in Wath, near Ripon, would have created 68,000kg of mushrooms a week. But plans for the site were rejected last month by Harrogate Borough Council, which cited concerns over traffic and the large scale of the development.
The concerns echo those of the local action group Wath Against Mushrooms, which feared the development would attract too much traffic to the village.
In a report to the planning committee, a council officer said: "The sheer scale, size and mass of the proposed buildings, their design, shape and colour and associated aprons, roadways, lighting, planting and lack of parking are not well designed, not in keeping and not in scale with its location."
Greyfriars chairman John Smith said the company was "disappointed" with the decision as it had pledged to take all lorries going in and out of the site via a route that would have avoided neighbouring villages.
He said that the changing value of the euro, higher minimum wages in competing countries such as the Netherlands and Poland and demand for local produce had prompted the firm to go for the multi-million-pound expansion and that he will be appealing the decision.
He added: "At the same time we cannot be diverted. Plans B, C and D are all in place. We have, for example, an opportunity to become involved with another operation, a farm smaller than ourselves, five miles away."