This study was conducted to explore the mechanism of dewaterability improvement of waste activated sludge by the filamentous fungus Talaromyces flavus S1. When the fungal spores were inoculated to the sterilized sludge, the sludge dewaterability was significantly improved by 48.1% and the reasons can be attributed to sludge pellet formation and degradation of extracellular polymeric substances, in particular the slime-EPS and loosely-bound EPS (LB-EPS). With the addition of fungal mycelium into the either sterilized sludge or non-sterilized sludge, the values of CST decreased by 74.0% and 43.7%, respectively, suggesting the fungal mycelium can improve the sludge dewaterability. After conditioned by the mycelium, the sludge cake by the diaphragm filter press was thicker and showed less water content than the control sludge. The results in this study demonstrated that the Talaromyces flavus S1 can serve as an environmentally friendly biological dewatering agent and has a promising application potential in the future.