According to the process the sludge is homogenized and heated to 30.degree.-60.degree. C. temperature. The heated sludge is circulated under 2-4 bar overpressure, and its temperature is raised to about 130.degree.-150.degree. C. in 1-2 sec by conducting steam of 130.degree.-151.degree. C. and 2-4 bar pressure directly into the sludge, thus granulation is brought about in the sludge. The sludge of increased temperature--while its temperature and pressure maintained--is further circulated for about 60-300 sec. Then, the sludge is adiabatically expanded in 1-2 sec by reducing the pressure to about 0.01-0.02 bar. The expanded sludge is separated to water, fat containing water and solid impurity and wet solid phase containing protein.It is characteristic to the apparatus that it is provided with device for heating the sludge, and pipe (18) for passing on the heated sludge connected with the heating unit (5) where an expansion valve is built in. Pipe (22) joining the separating tank (7) is connected with the expansion valve (6). The apparatus is provided with separator for separation of the sludge leaving the tank (7) to water, fat and solid phase.