This paper describes a simple means to settle fine particulate uranium dioxide in the grinding sludge water obtained during the centreless grinding operation of cylindrical-sintered uranium dioxide pellets to bring down the level of uranium in the supernatant to well below the permissible limits. The present method offers feasibility of utilizing the supernatant, thereby avoiding the necessity of long term storage of the sludge water. Additionally, it offers a way of recovering significant quantities of precious uranium dioxide that is in the form of suspended particulate material in the grinding sludge. In the absence of any treatment, the as-received grinding sludge, even after very long settling times, contains a considerable quantity of uranium in the supernatant in the form of very fine particulate material. Uranium being radioactive and keeping the radiological problems in view, the decant solution needs to be stored. The strategy described here brings down the uranium level in the decant solution to much below the permissible level by settling in considerably short duration with potash alum (potassium aluminium sulphate) additive. The process of settling is studied in the light of the electrical nature of the sludge particles, dosage of alum and pH, among others.