The present invention provides a method of sludge recycling by utilizing an existing facility as it is, degrading sludge efficiently and simply, and producing useful recycled water from treated water separated from the sludge, and an apparatus for sludge recycling. The present invention provides a method of sludge recycling including the steps of: bringing sludge into contact with a sludge degrading agent containing, as an active ingredient, microorganisms containing an actinomyces belonging to Streptomyces; degrading the sludge; separating the degraded sludge into a solid content and a liquid content; and producing recycled water from the liquid content.