Stainless steel sludge is generated as a waste in the grinding process, and the possibility of recycling stainless steel is considered here. Generally, stainless steel grinding sludge ranging about 10,000 are generated per a year in Japan, and most of it is discarded or re-melted with scrap steel. In this study, we considered the possibility of using the stainless steel sludge as metal powder for MIM or raw material for metal foam. For the MIM process, the metal powder will need some improvement, and flotation and spheroidizing processes of the sludge are necessary. For fabrication of the metal foam, untreated sludge can be used, and steel foam about 90% porosity is produced.