This study explores the valorisation of alum sludge, a byproduct of water treatment processes, as a sustainable reinforcement material in Poly(butylene adipate-co-terephthalate) (PBAT) composites. The research aims to address industrial waste challenges by developing eco-friendly composite materials while promoting circular economy principles. Alum sludge particles, classified into two size distributions (<63 m and <250 m), were incorporated into PBAT matrices at varying concentrations. The composites were characterised for their mechanical, thermal, crystallographic, and moisture adsorption properties; and their biodegradation behaviour was evaluated through soil burial tests over 60 days. The results revealed that the 63 mu m particle size fraction exhibited superior performance compared to the 250 mu m fraction, demonstrating improved mechanical properties, reduced degradation rates, and enhanced interfacial bonding. Composites with 5 wt.% alum sludge achieved a balance between reinforcement and processability, outperforming the other filler concentrations examined. This innovative approach highlights the potential of upcycling alum sludge into functional materials, advancing sustainable waste management and composite manufacturing. Furthermore, the observed variation in degradation rates suggests that these composites can be tailored for applications requiring controlled compostability.