In a method of processing paint sludge, measured portions of the sludge are supplied into a heating chamber for pyrolysis at about 1500° F. to disintegrate into organic and inorganic portions, the organic portion in the form of syngas is then drawn out, cooled, and pressurized to be used in kilns or combustion chambers, whereas the inorganic portion in the form of ash is directed to a calciner, where it is heated at about 1500° F. in a controlled presence of oxygen and cooled to have it ready for the reuse in paint manufacturing.