The invention discloses a sludge drying and incinerating integrated zero-discharge treatment system and treatment process, belonging to the technical field of harmless treatment of sludge. The treatment system is composed of a garbage storage pit, an air separation device, a garbage-sludge incinerator, a cyclone separator, a waste heat boiler, a bag-type dust remover, a turbo-generator set, a two-stage drier, a dried sludge storage bin, a fine powder separator, a condenser, a steam-water separator, and a carbon dioxide purifying and catching system. According to the invention, the dried sludge burns sufficiently in oxygen-rich atmosphere, the auxiliary fuel is saved, the incinerating waste heat is efficiently recovered and utilized, CO2 in discharged flue gas is cooled, purified, compressed and liquefied to ultimately obtain high-purity CO2 which can be used for industrial application, other impurities are recovered, dioxin and other extremely toxic substances are collected separately and conveyed to qualified divisions for unitized treatment, the purposes of treating a waste with another waste and promoting harmless treatment with resource treatment are realized, the waste treatment cost is lowered and the energy utilization rate is improved.