Changes in physical properties of palm oil sludge (POS) amended soil and their effects on oil palm seedling growth characteristics at 4 weeks after transplanting into the experimental media and 14 weeks after germination were evaluated using different rates of POS treatments. Results revealed that POS rates >15% (w/w) were detrimental to the development of the root system of oil palm seedlings. Approximately 60% mortality of primary roots was observed in the 40 and 75% sludge treatments resulting in severe chlorosis of seedlings after the 4-week period. Although about 16% mortality of primary roots was observed with 15% sludge amendment, the seedlings exhibited high vigour and profuse root development compared to the other treatments. Increasing amounts of sludge in the soil decreased bulk density which was associated with an increase in water content (r2 = 0.963; P < 0.001). the proportion of larger diameter aggregates (>4.0 mm) was higher, while that of smaller diameter aggregates (0-1.0 mm) was lower in the 15% sludge amendment compared to other treatments. The mean weight diameter using wet sieving, and wet aggregate stability (AS%) were also higher in the 15% POS treatment (3.7 ± 0.3 mm and 96.5 ± 2.9%, respectively). Scanning electron microscope studies showed that rates of sludge amendment >35% resulted in macropores in the soil being blocked by sludge particles, although at rates <35% the POS tended to bind soil particles.