The environmental impact of paper recycling and making processes is extremely severe in terms of water consumption and waste generation. Only for the Lucca district, up to 40,000 tons of sludges are produced per year, with a high cost associated to their disposal. With the aim of defining a strategy to give a second “life” to paper mill sludge (PMS), rich in inorganics and cellulose fibres, we herein devise a circular economy approach for the development of a sustainable and innovative solution for civil applications. Recycling of PMS, assimilated to a granular material, is based on the exploitation of compaction, in analogy with ceramic powders: the application of mechanical pressure is suitable to obtain panels of different shapes and dimensions according to the mould. Compaction was performed at different forming pressures to investigate the increasing trend of density of the waste material, originally highly porous. The addition of chemical binders of natural source to the sludge powder demonstrated to further improve the final overall cohesion. Among the characterization methods used for compacted sludge panels, Brazilian tests were exploited to define the fracture strength, while ultrasounds were adopted to assess the Young’s modulus.