Experiments were conducted to investigate the effect of red mud (RM) dosing on granular sludge formation, biogas production and carbon dioxide reduction from palm oil mill effluent (POME) digestion. The results show that dosing RM adversely affected sludge granulation due to the formation of precipitates and hydrolyzates with poor settleability. However, at the optimal dosage (4.5 g RM/L), it could benefit granules formation and stability by improving the in extracellular polymeric substances and biogas production rate was 87.9 l g-VSadded/d at 4.5:30 mixing ratio. The ratio of 0.5:80–2.5:50 g-VS did not affect methane production and the highest methane yield average 79.9 l/g-VS added for RM:POME of 4.5:30, 14.5 higher respective to that of POME alone only. A CO2 reduction of 89.6% was obtained at RM of 4.5:30 ( r = 0.998). The chemical oxygen demand (COD) removal was 87% obtained at 30 g COD/l and 4.5:30 g-VS with growth of sp. Methanosarcina. The process evaluation was found model cone best fitted and actual production of CH4. The evidence by low root mean square prediction error (RMSPE) showed high correlation difference (Dif. %) with predicted value and actual values. Analyses were evaluated that the POME degradation with RM utilization, substantially enhanced the hydrolysis rate (khyd), lag phase time h (λ) and methane production rate ( Rm) of mixing ratio of RM:POME. Furthermore, the system showed solid reduction with the increased production of methane.