Biodiesel, a promising eco-friendly alternative to diesel, faces a major obstacle in the form of high feedstock costs (50%–70%) for production. Sewage sludge (SS) as a viable feedstock for biodiesel production was recognized due to its abundance, consistent availability, and low cost. However, certain limitations, such as pretreatment and drying, are challenging. This study assessed biodiesel production costs from dewatered and wet SS in Japan, utilizing Aspen Plus for simulations. Estimated costs are 0.09 USD/kg and 0.084 USD/kg for dewatered and wet SS, respectively. Biodiesel prices and cost-influencing factors are analyzed, revealing a potential break-even price as low as 540 USD/t (70% below market price) with a positive net value of 8331 USD. Remarkably, producing biodiesel from SS is found to be nine times cheaper than Japan's current biodiesel production cost. The proposed SS biorefinery strategy, integrated within Japanese WWTPs, is a notable outcome. But the limitations and uncertainties that may affect these results are also highlighted for the reader's consideration.