The sludge disintegration performance of a rotor-stator type hydrodynamic cavitation reactor (HCR) was experimentally investigated. First, the cavitation-generation mechanism was revealed using flow visualization and thermal performance was evaluated. To determine the effects of cavitation (including thermal energy) and shear stress on sludge disintegration, the performance of the HCR with and without the dimples and temperature control was analyzed. Finally, the effects of the operating conditions on the sludge disintegration performance were evaluated via a full factorial design of varying inlet pressures and rotational speeds. The main assessment factors for the sludge disintegration performance were analyzed such as particle decomposition and solubilization performance. The results indicated that when dimples were present and there was no temperature control, the reduction of sludge particles increased by 50%–80%. Additionally, the disintegration performance increased with the rotational speed and was minimized at the highest inlet pressure.