The traditional methods of disposing of petroleum sludge are short of providing the much-needed benign treatment. A more robust treatment technique is desirable. In this investigation, a laboratory-scale thermal plasma reactor was developed and was used to treat 20 g per batch of petroleum oily sludge. The output current and the plasma temperature measured using an infrared thermometer range were 5 – 200 A and 356 – 1694 °C respectively. After the plasma treatment, the morphology of the sludge transformed from jelly-like to crystalline solid structure. A mass and volume reductions of 36.87 – 91.40% and 59.59 – 94.52%, respectively, were achieved in a treatment period of 2 – 5 min. A Total Organic Compound (TOC) reduction of 21.47 – 93.76% were equally achieved in same treatment period. Heavy metals concentration in the sludge were increased after the plasma treatment, whereas, Ni and Pb manifested only in the solid residue. The result of the leaching test of heavy metals from the solid residue is within the US EPA recommended level for secure landfill. The major components of the flue gas were H2, CO, CO2 and H2O with small quantities of CH4, C2H2 and C2H4. The flue gas has an LHV range of 7.40 – 7.86 MJ/Nm3 with a corresponding cold gas efficiency of 25.22 – 51.90%. Based on the operating cost estimation, a profit margin of $ 0.76 /kg of sludge was established. The thermal plasma technique is, therefore, an alternative treatment method for treating petroleum sludge.