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The use of deinking paper sludge (DPS) as a fertilizer instead of sending it to landfill could play a role in reducing greenhouse gases and improving soil properties. The objectives of this study were (1) to evaluate the changes in the physical (permeability and structural stability), chemical (particularly soil pH), and biological (microbial metabolic quotient (qCO2), microbial biomass soil CO2 emissions) of a calcareous agricultural soil following two successive annual amendments with three treatments (0, 30, and 60 Mg DPS ha−1—control, DPS30, and DPS60, respectively); and (2) to determine whether the addition of N-fertilizer to these treatments (controlF, DPS30F, and DPS60F, respectively) causes changes to soil fertility. The DPS application increased soil organic matter (+0.80%: DPS60 vs. control; and +0.35%: controlF vs. DPS60F), available phosphorus (+23.14 mg kg−1: DPS60 vs. control; and +14.34 mg kg−1: DPS60F vs. controlF), potassium (+0.6 g kg−1: controlF vs. DPS30F), and calcium (+0.28 g kg−1: DPS60 vs. control). The 60 Mg DPS ha−1 rate improved permeability and structural stability, regardless of the presence or absence of N-fertilizer. On the other hand, the 60 Mg DPS ha−1 rate without N-fertilizer lead to a decrease in total mineralization rate and qCO2, thereby indicating a reduction in CO2 emissions. The rate of 60 Mg ha−1 DPS could be effectively used to enhance the permeability and stability (soil restoration) and mitigate CO2 emissions, whereas the 30 Mg ha−1 rate could be used as fertilizer to improve the fertility of calcareous soils. [ABSTRACT FROM AUTHOR]