<p>The generation of waste from the paper industry represents a large-scale global issue. Despite its potential for reuse or recycling, such waste is often underutilised due to the lack of efficient processes for proper valorisation. This study addresses the challenges associated with the generation of paper mill sludge, focusing on the conversion of this waste into sludge cellulose fibres (SCF), thereby promoting its valorisation and potential reuse. The waste material was characterised using standardised methods of the Technical Association of the Pulp and Paper Industry, revealing a cellulose content of 71.90%. The extracted fibres were analysed through physicochemical, morphological, thermal, and spectroscopic techniques to evaluate their structure, composition, and stability. Furthermore, the feasibility of using SCF as an alternative to commercial cellulose fibres in Stone Mastic Asphalt (SMA) mixtures was assessed. Performance was assessed using the Schellenberg draindown test to determine the effectiveness of SCF in controlling binder drainage within the asphalt mixture. The results demonstrate that the incorporation of SCF in SMA mixtures at a minimum fibre content of 0.30% effectively mitigates binder draindown. Overall, the use of SCF represents a viable strategy for the sustainable valorisation of paper industry waste and an alternative to conventional stabilising fibres.</p>