A field study was conducted to test the potential of 5-year consecutive application of fresh industrial sludge (FIS) and composted industrial sludge (CIS) to restore soil functions at surface (0–15 cm) and subsurface (15–30 cm) of the degraded agricultural land. Sludge amendments increased soil fertility parameters including total organic carbon (TOC), soil available nitrogen (SAN), soil available phosphorus (SAP) and soil available potassium (SAK) at 0–15 cm depth. Soil enzyme activities i.e. dehydrogenase (DHA), β-glucosidase (BGA) and alkaline phosphatase (ALp) were significantly enhanced by FIS and CIS amendments in surface soil. However, urease activity (UA) and acid phosphatase (ACp) were significantly reduced compared to control soil. The results showed that sludge amendments significantly increased microbial biomass nitrogen (MBN) and microbial biomass phosphorus (MBP) at both soil depth, and soil microbial biomass carbon (MBC) only at 0–15 cm depth. Significant changes were also observed in the population of soil culturable microflora (bacteria, fungi and actinomycetes) with CIS amendment in surface soil suggesting persistence of microbial activity owing to the addition of organic matter source. Sludge amendments significantly reduced soil heavy metal concentrations at 0–15 cm depth, and the effect was more pronounced with CIS compared to unamended control soil. Sludge amendments generally had no significant impact on soil heavy metal concentrations in subsoil. Agronomic viability test involving maize was performed to evaluate phytotoxicity of soil solution extract at surface and sub-surface soil. Maize seeds grown in solution extract (0–15 cm) from sludge treated soil showed a significant increase of relative seed germination (RSG), relative root growth (RRG) and germination index (GI). These results suggested that both sludge amendments significantly improved soil properties, however, the CIS amendment was relatively more effective in restoring soil functions and effectively immobilizing wastewater derived heavy metals compared to FIS treatment.