"A grotesque fish. It does'n look appetizing"
— In-game description
Cooking this in a Bonfire or Furnace will produce Grilled fish. Alternatively, you can turn it into 4 pieces of Fish flesh at the cooking table to then he cooked into Grilled fish flesh. Turning Mutant fish into Fish flesh appears to be optimal. It is also an ingredient for making Fish glue, which is then turned into Bows.
You can only Fishing them at night.