Thermal conversion of municipal sludge to oil has been investigated as a viable alternative for ultimate sludge disposal due to generation of energy. The conversion process using water as a solvent was evaluated in a batch mode using primary and secondary municipal sludges. A well defined oil separation procedure was developed in the research. The oil obtained after thermal conversion was dark brown, solid at room temperature and liquid at above 50 deg C, with an average heat content of 9400 cal/g oil. The increase of oil mass and energy yields as a result of thermal reaction was 73 and 67% in the primary sludge, and 515 and 485% in the secondary sludge, respectively, all with 10.9% volatile solids content. Catalyst addition did not increase the oil mass and energy yields. Data showed that primary sludge in the thermal conversion process.