Stainless steel has a variety of applications nowadays because of its mechanical strength and corrosion resistance. The large-scale machinery made up of stainless steel has an outstanding performance and endurance for manufacturing industries. However, stainless steel scraps accumulate with a lubricant to form sludge during the operation. To reduce the environmental hazards caused by sludge, this research attempts to construct a hydrometallurgical process to recover iron, nickel, and chromium from the sludge. The experiments could be divided into four parts. First, calcination was adopted to remove the oil and water content. The factors that have impacts on the leaching efficiency, such as the type of acid and the calcination temperature, were investigated in the second part. It was optimal that the sludge was calcined at 300 ℃ for 8 h and leached by 4 mol/L HCl. The results revealed that the leaching percentages of iron, nickel, and chromium were 97.6%, 98.1%, and 95.7%, respectively. In the two-stage solvent extraction procedure, Fe(III) could be efficiently recovered by using 0.1 mol/L bis(2-ethlhexyl) phosphate (D2EHPA) at pH 1.5 with an Aqueous/Organic ratio of 1 over 10 min. The results indicated that the extraction percentage of Fe(III) was beyond 99%. Eventually, the recoveries of nickel and chromium were respectively 99.5% and 75% through chemical precipitation.