The disposal of sludge generated by water treatment plants poses major financial and environmental problems. Drying of the sludge is an essential pan of any disposal process which may include incinerating, landfilling or upgrading. In the present study, experiments were carried out to investigate the drying of sludge in a spouted bed and to characterize the hydrodynamics and mass transfer mechanisms. The effect of bed moisture content on the minimum spouting velocity (Ums) was examined for sludge granules. Umswas found to increase with increasing the moisture content of the sludge particles. The gas phase mass transfer coefficient in the dryer was determined using porous calcined alumina particles and the results were compared with predictions by correlations available in the literature. The existing correlations gave poor predictions for the mass transfer coefficient. A new correlation for the mass transfer coefficient in a spouted bed dryer was developed based on the experimental results.