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Abstract Schinus terebinthifolia Raddi is a species with several potential uses; selecting the proper substrate and fertilizer rate can be vital for seedling production in a nursery environment. This study aims to evaluate two substrates, namely: (i) sewage sludge (SS) from Ilha WWTP; (ii) a commercial substrate (CS) made of organic materials (mainly sphagnum peat). Increasing rates of controlled-release fertilizer – CRF (0, 3, 6, and 12 kg m−3) were applied. The experiment was completely randomized with a factorial 2 × 4 scheme (substrates × rates). The seedlings’ growth, biomass, and quality were evaluated. The treatments were compared by Tukey test and regression analysis, where linear, quadratic, and cubic models were considered. Principal components analysis (PCA) and cluster analysis were performed. The CRF rates showed non-significant effects for most of the investigated variables in the SS substrate. In the CS, a 7.8 kg m−3 rate of CRF showed the best growth performance. The multivariate analysis of the morphological parameters proved suitable as a complementary approach to evaluate the seedlings’ quality. Seedlings reached recommended values for height, diameter, and quality in the 100% SS substrate without chemical fertilizers; thus, Schinus terebinthifolia production in the SS from Ilha is recommended. Besides the growth advantage, the SS can promote nursery cost savings with commercial substrates and chemical fertilizers.