Sludge disposal is a nuisance for municipal wastewater treatment plants. Increasingly stringent environmental control regulations have resulted in limitations on sludge disposal options, and hence there has been a resulting increase of interest in disposal by incineration. In this study the potential of using dewatered sludge mixed with clay as lightweight coarse aggregate after incineration was examined, and the properties of the aggregate as well as the resulting concrete were investigated. From the tests conducted on 10% fines, bulk density, specific gravity, porosity, water absorption, and compressive strength, it was found that clay‐blended sludge could be used to produce lightweight aggregates.