This study demonstrated the feasibility to produce Bacillus thuringiensis subsp. kurstaki (Btk) based biopesticides using wastewater sludge as raw materials under solid-state fermentation (SSF). More than 10(10) CFU/g viable cells of Btk were obtained using sludge or its mixture with agricultural wastes. This study well considered the effect of heavy metals on Btk growth and their changes of chemical speciation caused by SSF. The IC50 (concentration causing 50% inhibition in total cell biomass) for Pb(II), Cu(II), Cd(II) and Cr(III) on Btk were determined to be 227, 82, 15 and 263 mg/L, respectively. Exposure to 150 mg/L of Cu(II) severely reduced the amount and size of toxin crystals, which decreased the endotoxin synthesis and entomotoxicity potency of Btk cells. Using Tessier's sequential extraction procedure, the exchangeable heavy metals in sludge were shown to be transformed into residual fractions after SSF, and thus significantly reduced their bioavailability and potential environmental risks. (C) 2010 Elsevier Ltd. All rights reserved.