The increasing amount of municipal sludge in China requires safe and effective management to protect human health and ensure environmental sustainability. Pyrolysis is a thermochemical process that that decompose organic matter at elevated temperature and under anaerobic conditions, and it has attracted an increasing attention in sludge treatment in the recent years. However, comprehensive environmental and economic assessment of sludge pyrolysis in China's context is rare, due to the small quantities of full-scale sludge pyrolysis plant. In this paper, we applied our design and operation parameters of full-scale sludge pyrolysis plants to generate the material and energy consumptions of the pyrolysis system under various of conditions, including sludge organic content and moisture content, system size, system energy distribution, and whether or not heat substitution is applied. Life cycle assessment and techno-economic assessment were then applied to investigate the environmental and economic performance of the system Our results demonstrate the significant environmental and economic impacts associated with sludge properties and system size. Generally, sludge with higher organic content and lower moisture content requires less natural gas consumption, which leads to a simultaneous improvement of the system environmental and economic performance. The system economic performance is more sensitive to the system size, and centralized sludge handling using a larger pyrolysis is more economic favorable. In the most ideal case, the average global warming potential and minimum sludge handling price of sludge pyrolysis could be as low as -32.5 kg CO₂-Eq/t DS and 188.8 $/t DS, respectively. Based on these results, we discussed the pathways that could be taken to further optimize the environmental and economic performances of the pyrolysis system.