The invention relates to a disposal system of municipal dewatering sludge, and belongs to the technical field of environmental engineering. The disposal system comprises a high-temperature and high-pressure reactor, a sludge cooling device, a magnetic powder hopper, a stirrer, a magnetizer, an anaerobic digestion cavity, a magnetic powder separation device, a feeding hopper, a metal magnetic separation device, a dewatering device, an afterheat drying device and a mud cake collecting device. The anaerobic digestion efficiency of the sludge can be improved by the sludge preprocessed by the high-temperature and high-pressure magnetic powder and the magnetizer; heavy metal in the sludge can be effectively extracted by the metal magnetic separation device; the late sludge disposal difficulty is reduced; the magnetic powder added in the sludge can be effectively separated by the magnetic powder separation device, so that the magnetic powder can be recycled, and the cost is saved. The afterheat drying device fully utilizes the afterheat of the sludge preprocessed by the high-temperature and high-pressure reactor, so that the energy is greatly saved; system parameters are set on a computer, and the data is processed by computer program, so that the efficiency of the system is greatly improved.