The invention belongs to a new process for producing a compound fertilizer by municipal sludge. The process is characterized in that the production process comprises procedures of obtaining sludge, dewatering, drying, crushing, screening, testing, adding additive, nitrogen, phosphorus, potassium, microelement, compounding, fermentation, granulating, drying and packaging, wherein, the screening is performed by a 70-120 meshes screen, the content of the additive added is 1-15% of the sludge by weight, nitrogen, phosphorus, potassium and microelements can be used as soluble raw materials. What is lacked is complemented according to a sludge test data to achieve standard content of the compound fertilizer product. The process is characterized by converting nitrogen, phosphorus, potassium nutrients which are not easily absorbed in the sludge by plants into absorbable quick-acting fertilizer by the additive and processing, consumption of the nitrogen, phosphorus, potassium, microelements is small, the cost is low, and the compound fertilizer has quick-acting property of chemical fertilizers and long-acting property of the organic fertilizers, and is applicable to agriculture popularization application.