Paper mills generate large amounts of solid waste composed of a mixture of fibrous cellulose, clay, and lime. Although this material can be disposed of by incineration or in landfills, these options can be expensive and do not effectively utilize the organic carbon, nutrients, and lime it contains. One beneficial use of paper mill sludge (PMS) is as an aid in the reclamation of coal surface mines where low pH, organic matter, and nutrients levels in the material used to cover the spoil can inhibit re-established of vegetation and soil biota. There are concerns, however, that use of PMS may result in unacceptable offsite impacts on water quality, particularly when applied at high rates. Therefore, we applied PMS at three rates (0, 224, and 448 Mg/ha) to replicated plots at an active surface mine and monitored runoff volume and quality from April to December 2006. Runoff was reduced 4 to 5.6x for the medium and high rate plots compared to the untreated plots. Sediment loss was dramatically reduced from 42000 kg/ha on the untreated plots that received standard reclamation practices to 900 kg/ha for the medium PMS plots and 400 kg/ha on the high PMS plots. Losses of N and P were low and similar for all plots, but the runoff from the PMS-treated plots was high in dissolved organic matter and low in dissolved oxygen for the first 5 months after application compared to plots that did not receive PMS.