Abstract: An optical paper sorting system uses diffuse reflectance to identify a sheet of paper, conveyed on a conveyor, as either white or groundwood grade, or white, colour, or mixed grade. In sorting, paper that does not meet a specified minimum requirement, for example, having less than a maximum amount of lignin, is mechanically diverted from a stream of input paper waste to a rejection bin. Otherwise, the paper is directed to a collection bin. The optical paper sorting method may be used to sort paper into different grades that is then recombined to produce a predetermined grade of sorted waste paper.