A novel bioprocess design to convert paper mill sludge (PMS) to biofuels is proposed in this work. The design utilizes cellulosic fiber recovered from the PMS via optimized de-ashing (HCl washing) step. This work specifically provided a technical and economic analysis of paper mill sludge conversion into biofuel production using a novel protocol. The protocol is based on scanning electron microscopy (SEM) analysis to assess the quality of the contained cellulose prior to further processing. The results are crucially important to determine the suitability of the PMS feedstock to produce biofuels. SEM analysis was employed as a preliminary screening tool to evaluate sludge digestibility and conversion. The SEM characterization technique established a direct relationship between the fiber morphology, presence of crystals salts and sugar yield after enzymatic hydrolysis. Substantial structural changes were observed before and after de-ashing the sludge samples, leading to a correlation between the surface morphology and the washing step. The results suggested that de-ashing changes the surface morphology and upon analysis, increased the sugar yield up to about 86% as opposed to 2.2% in sludge sample A as an example. The PMS conversion into biofuel was simulated using Aspen PLUS and compared to a similar process using corn stover as feedstock. The simulation results showed it is 20% cheaper to produce bioethanol from PMS compared to corn stover. The simulation revealed less energy demand by around 13 320 MJ/h compared to that when corn stover was used.