This research carried out to investigate the effects of inorganic materials in paper sludge on the thermal degradation and of paper sludge addition on physical and mechanical properties of paper sludge-wood particle mixed boards in comparison with unmodified particleboards. Also these unmodified particleboards and paper sludge-wood particle mixed boards were soaked in aqueous solutions of fire-retardant chemicals(diammonium phosphate and zinc chloride), and their fire retardancy were tested by oxygen index method and ISO ignition test to determine the feasibility of paper sludge, industrial waste, as a recyclable resource in fabrication of fire-resisting panels for building material. Since the redrying of fire-retardant treated particleboards and paper sludge-wood particle mixed boards were made by press drying method, this process was a simple and effective method. On the other hand, flexural bending strength and internal bonding strength were also analysed to evaluate mechanical properties through standard method.