A solid waste recycling system for use in recycling containers containing residual liquids. The recycling system includes a housing having an inlet for receiving the containers. Two pluralities of oppositely rotating rotary knives shred the containers into shreds. A conveyor transports the shreds toward a drying zone. One plurality of spray heads washes the containers with cold or hot water during shredding and another plurality of spray heads washes the shreds with cold or hot water while the shreds are being conveyed toward the drying zone. The hot water and residual liquids are drained off in the drainage zone. The washed shreds are dried in the drying zone. The dried shreds are then stored in the storage receptacle, which is slidably removable from the housing. The rotary knives, drainage zone, dryer and conveyor are all located inside the housing, which is optionally mounted on rollers to provide a portable system.