The invention discloses a radial-flow constructed wetland sludge treatment system and a method thereof. The system comprises a sludge water inlet pipe, a regulating pool and at least one constructed wetland sludge treatment pool, wherein a pool body of the constructed wetland sludge treatment pool is internally provided with a gravel drainage layer for collecting sludge percolate, a filtering layer for purifying the sludge percolate as well as a sand layer for separating mud from water from bottom to top, a mud cake layer made of drying sludge is formed on the sand layer, a sludge layer to be treated is arranged on the mud cake layer, and wetland plants are planed in the pool body. The sludge is fully dried, the volume of the treated sludge can be reduced to 4%-30% of the original volume of the sludge; after anaerobic digestion and aerobic digestion are carried out on organic compounds in the sludge in the constructed wetland, and the content of volatile organic compounds in the sludge is reduced by 20%-30%. The constructed wetland sludge treatment technology has the advantages of remarkable sludge reduction and stabilizing treatment effect, low construction and operation cost, environment friendliness and the like.