Preheat oven to 375°F. Melt butter in heavy large skillet over medium-high heat.
Add mushrooms and sauté until brown and soft, about 6 minutes. Generously butter 11x7x2-inch baking dish. Peel and cut potatoes into 1/8-inch-thick slices. Arrange 2 layers of potatoes in prepared dish. Spoon 1/3 of mushrooms over potatoes.
Sprinkle with 1/2 teaspoon salt and 1/4 teaspoon pepper. Repeat 2 more times with potatoes, mushrooms, salt, and pepper.
Pour cream over potatoes. Cover with foil and bake 45 minutes. (Can be made 2 hours ahead.
Let stand at room temperature.) Uncover and continue baking until golden brown and set, about 20 minutes longer (30 minutes if room temperature).