Any Code issue with using Plywood finish in Mech Room

A homeowner building a house with the mechanical room inside the conditioned part of the home asked whether plywood could be used as a finish material on the walls, in place of standard drywall (also called GWB, or gypsum wall board). No one had answered the question yet, so there's no verdict on whether this works or passes code.

The question touches on something worth knowing if you're planning or renovating a mechanical room, which typically houses equipment like a furnace, water heater, or electrical panel. Building codes often have specific requirements for wall finishes in these spaces, partly tied to fire safety. Drywall is the standard choice because it resists fire spread better than wood products like plywood. Whether plywood is allowed instead can depend on local code, the type of equipment in the room, and how the space is used.

If you're working on a mechanical room in your own home and considering a finish other than drywall, it's worth checking with your local building department or an inspector before installing it, since requirements vary by location and by what's inside the room. This particular question remains open, so there's no specific guidance yet from other homeowners or builders on how it played out.