Oxy-fuel co-combustion of waste sludge and biomass with flue gas recirculation was conducted to observe the combustion characteristics and enrichment of CO2 using a 30 kWth circulating fluidized bed. The combustion reaction was accelerated and the ignition time was shortened by increasing the blending ratio of wood pellets and oxygen mixing ratio. The best combustion performance was observed at a 30% blended biomass ratio, with 23% oxygen mixing rate as oxy co-combustion with respect to heat recovery and enrichment of CO2; this study included experiments with ranges of 0 to 70% for the blending ratio and 21 to 30% for the oxygen mixing ratio. With flue gas recirculation at 60%, the oxy-fuel co-combustion of sludge with biomass was optimized in high enrichment of CO2 (over 90%) with less pollutant emissions, specifically 0.91% CO and 14 ppm NO.