Cut or tear the corn tortillas into bite-size pieces; set aside.
In a saucepan over low heat, melt butter; add mushrooms and sauté until mushrooms
are tender. Remove mushrooms; set aside.
Add flour to melted butter and stir until blended and smooth. Slowly and stirring
constantly, add the milk to the saucepan, cooking until thickened and smooth. Return
the cooked mushrooms to the sauce. Add taco sauce and chili powder to the mushroom
In a large shallow casserole dish make a layer of the tortilla pieces. On top
of the tortilla pieces, place a layer of chicken pieces. Top chicken with chopped
green chiles. Pour the sauce evenly over all and top with the shredded cheese.
Refrigerate, covered, for a few hours before baking for best flavor.
Bake casserole at 325 degrees F for 25 to 35 minutes, until hot and bubbly.