The origins and characteristics of oil sludge was illustrated in various stages of oil shale retorting. oil sludge was Extracted by the use of waste toluene, recovers shale oil by hot alkaline water elution. The mass concentrations of sodium carbonate, the mass of waste toluene and reaction temperature have played roles in the the yield of oil shale. After mixing the treated oil sludge with oil shale dust, sulphur-fixing agent etc., and then mold the mixture, and drying, the molded mixture is sent to retort for low temperature retorting. Thus, the reclamation and hazardfree treatment of oil sludge can be realized.