Abstract Flue gas-to-ash controls on sulfur (S) species of the combustion of textile dyeing sludge (TDS) are pivotal in the achievement of circular and cleaner economies. This experimental study aimed to characterize S transformations in TDS as a function of temperature (600–1000 °C) and blend ratios of spent mushroom substrate (SMS) and calcium oxide (CaO) through thermodynamic equilibrium simulations. The conversion ratio of S to flue gas from the mono-combustion of TDS rose by 29.7% between 600 and 1000 °C and was 92.9% at 1000 °C. The increasing sulfur dioxide (SO2) emission with the high temperature occurred from the decomposition of sulfates. The conversion of S to SO2 decreased significantly with an increase in SMS from 10 to 50% and enhanced the S distribution in fly ash. Potassium and phosphorous in SMS appeared to play a significant role in the conversion of S. The addition of CaO exhibited a good desulfurization performance, with the S content of ash peaking at 5.2% at 800 °C with 7% CaO. The desulfurization efficiency of CaO highly depended on the temperature and blend ratios. The addition of SMS facilitated the agglomeration to form large particles at 1000 °C and formed more micro pores on their surfaces. Our equilibrium simulations pointed to the important role of CaO-assisted co-combustion versus mono-combustion of TDS in the S retention as well as to the enhanced decomposition of calcium sulfate (CaSO4) by SMS. Chlorine had a better affinity toward potassium to promote the release of gaseous potassium chloride (KCl) which in turn appeared to react with SO2 in flue gas and formed sulfates through sulfation reaction.