The results of investigations on the processing of carbonaceous waste, namely, oil sludge and oil vacuum distillation residue (vacuum residuum) by hydroconversion in the presence of molybdenum catalyst in situ generated in the hydrocarbon medium are presented. A scheme for separation of heavy residue of the hydrocarbon part of the sludge has been developed. The characteristics of the vacuum residue of the sludge hydrocarbon part and the vacuum residue of oil distillation have been compared. It has been shown that a high degree of conversion of the heavy hydrocarbon part of oil sludge can be reached using the complex scheme of separation followed by hydroconversion in the presence of the molybdenum catalyst generated in situ in the hydrocarbon medium.