A method is described for converting substantially untreated organic sludge into useful substances. The sludge may include primary sludge, a mixture of primary and secondary sludges from municipal wastewater treatment facilities, slurries of agricultural manure, and other organic wastes. The sludge is mechanically comminuted to reduce the size of organic solids, the sludge is then further mechanically disintegrated and thereafter it is subjected to enzyme hydrolysis to produce a biologically stable colloidal slurry with improved biochemical potential reactivity. Typically, the hydrolysis step is followed by a further cell/particle disintegration step and a secondary hydrolysis step. If necessary, heavy metals are removed from the suspension in a chelating step which are recovered as a recyclable concentrate. The suspension can be used as a liquid fertilizer or it can be dewatered. If used as a liquid fertilizer the suspension can be inoculated with microalgae to enrich the fertilizer with nitrogen. Alternatively, the demineralized product may be incinerated or used as a feedstock for other industrial processing.