The present paper examines the co-conversion of waste activated sludge and birchwood sawdust to bio-oil via hydrothermal liquefaction. The purpose of using the sawdust with sludge was to increase the solids concentration using another waste material for possible resource recovery. The operating conditions including reaction temperature, reaction time and solids concentration were optimized based on the response surface methodology for the maximum bio-oil production. A maximum of 33.7 wt% bio-oil yield was obtained at optimum operating conditions of 310 degrees C, 10 min, and 10 wt% concentration. Comparison of this oil with the oil produced from only sawdust showed a significant improvement in the molecular weight of the bio-oil by having lower molecular weight (hence less viscosity), indicating the presence of lighter components, with a slight decrease in bio-oil yield. The optimized operating condition could be used to effectively co-liquefy waste activated sludge and sawdust with the advantage of producing higher quality bio-oil with respect to molecular weight. The water-soluble product which is the largest fraction of by-products from the co-conversion was tested as a feedstock for biogas production through anaerobic digestion and resulted in 800 ml bio-methane production per 0.816 g of TOC or 2.09 g of COD of this waste stream. (C) 2017 Elsevier Ltd. All rights reserved.