The invention relates to a wet sludge drying and incineration processing system. The system comprises a low-temperature pyrolytic reaction device, a centrifuging filtering device, a steam condensation device, a filtrate recovery device and a sludge incineration device; the low-temperature pyrolytic reaction device is used for carrying out low-temperature pyrolytic reaction between wet sludge and saturated steam in order to convert macromolecular organics in the wet sludge into low-molecular organics and destroy a sludge water-holding structure; the centrifuging device is used for carrying out centrifuging filtering to the wet sludge after pyrogenation; the steam condensation device is used for condensing and collecting bled steam converted from saturated steam in the low-temperature pyrolytic reaction device; the filtrate recovery device is used for collecting filtrate produced in the centrifuging device and for collecting condensed fluid from the steam condensation device; the sludge incineration device is used for incinerating semidry sludge after being dehydrated in the centrifuging device and insoluble gas remained in the steam condensation device as fuel. The system also relates to a process for carrying out the processing of wet sludge drying and incineration by adopting the processing system. The system and the process can solve the problem of sludge resource regeneration in a mode of environmental protection, energy conservation, high resource utilization rate and low operating cost.