During the papermaking process, fibers which are physically too short to bind with, end up falling through the press section, together with the excess water. These contents are led to a wastewater system, where the main goal is to separate, process and return clean water into the environment, or recirculate it back into the paper mill. Once the water has been separated, the portion of cellulose fibers which are still left is called paper sludge.

Paper sludge is thus a byproduct of the paper production.