The industrial production of pulp and paper generate large amounts of solid and liquid residues, particularly sludge from wastewater treatment and ash from the biomass furnace, requiring economical and environmental methods of disposal. These residues are usually incinerated, landfilled or applied to soil, but other are uses are increasing in Europe. Several studies have demonstrated that soil application in forestry is an economically viable practice and promotes soil quality and forest productivity. However, soil application must be done according to an implementation plan in the order guarantee the best environmental practices and legal requirements, always taking into consideration forest productivity. Composting of pulp and paper industry residues is an environmental sound option to the direct application of those residues to the soil. However, the costs of the composting process require a sustainable management plan. This management plan must be based on field data, in order to determine composting conditions requirements and the final compost quality. To obtain this data, a mix of residues from pulp and paper industry using eucalyptus (Eucalyptus globulus Labill.) was prepared with: primary sludge (46% v/v), secondary sludge (46% v/v), fly ashes (2% v/v) and, as bulking agent, milled eucalyptus bark (6% v/v). This mix, with an initial C/N ratio of 2, was composted in a 1.2m³ insulated plastic container, with mechanical turning, to simulate the conditions normally occurring in a windrow composting process. Temperature, moisture, pH and electrical conductivity were regularly controlled. Mechanical turning provided aeration and the homogenization of the mix. The raw materials, the composting mix and the final compost were chemically, physically and biologically characterized. The composting process, carried out during 3 months, reduced the initial volume of the mix by roughly 60%. The mature compost obtained showed no phytotoxicity or bad odor, was easier to handle than fresh sludge, presented a low level of heavy metals, and showed good potential as organic fertilizer (organic matter 44g 100 g-1; pH 7.6; electrical conductivity 0.54 dS m-1; total nitrogen 1.7 g 100 g-, phosphor 1.0 g 100 g-1). An economical evaluation, comparing the application of fresh residues to their compost to the soil, was developed for a region in the southwest of Portugal (Palmela and Montijo). This study indicated that composting is an economical option for pulp and paper industry residues treatment if the process costs are below 8.05 € t-1. Moreover, composting increases the end uses of the residues (more uses for compost than for the untreated residues) and reduces the possible adverse environmental effects from fresh residues application, while reducing environmental impacts associated to fossil fuels consumption for their transport and soil application. [ABSTRACT FROM AUTHOR]