Abstract: A method of converting industrial, domestic or other sludge, into a pelletized or granular fertilizer, as well as a sludge converter for practicing the method. The sludge is dewatered to form sludge cake solids which are dried in a dryer, and then sorted with a sorter into a sorted product comprising oversized, undersized, and standard sized product. Oversized product containing fibrous material is reduced in size by grinding in a hammermill. A portion of the sorted product is recycled for mixing and sizing in a mixer with the dewatered sludge cake solids. To control dust and odors, cyclones and a condenser remove a substantial portion of the gaseous particulate matter and condensable gases from the converter, and any remaining noncondensates are burned in the heat source flame. A waste oil burning heat source supplies heat energy to the dryer.