Abstract: Oil, water, and sludge are separated from a mixture thereof to provide waste oil, usable water, and concentrated sludge. The sludge can be further reduced in volume to facilitate disposal. The invention includes a system having a vessel with a coalescer supported therewithin to form an upper oil containment chamber at the top of the vessel, a contaminated water inlet chamber at one side, a lower sludge containing chamber at the bottom, and a treated water outlet chamber at the other side. The coalescer includes a number of corrugated plate members disposed parallel to one another and inclined respective to the horizontal. The corrugations of the plate members, when viewed in horizontal cross-section, form a sinusoidal wave pattern. There being a wide, long, thin, inclined, sinusoidal passageway formed between the plate members that extend from the inlet chamber to the outlet chamber.