The Matanza-Riachuelo is one of the most polluted rivers of Latin America. The complex chemical mixture of pollutants discharged into the river is accumulated in the river sediments. In this paper, Matanza-Riachuelo river sediment composition and genotoxicity were tested in order to develop a cost-effective, environmentally sound option for disposal and management of contaminated dredged materials. Sampling was performed in a rural area, in a solid waste dumpsite and also in an urban and industrial area. The concentrations of total heavy metals increased from the upper basin to the lower basin. The Ames Salmonella typhimurium test and the Saccharomyces cerevisiae D7 test were performed using toxicity characteristic leachate procedure (TCLP) leachates. The concentrations of copper, lead, and chromium in the leachates exceeded the guide levels for the protection of aquatic life. Low concentrations of organic chlorinated compounds were detected in the leachates. Genotoxic profiles were obtained by testing TCLP leachates from polluted sediment samples with Salmonella typhimurium, Saccharomyces cerevisiae D7, and water sediment suspension with Allium cepa test. No mutagenicity effects on Ames test were observed. Gene conversion and mitotic reversion in Saccharomyces cerevisiae D7 and chromosome aberration in Allium cepa were induced by the sediment samples. Results obtained suggest that dredged sediments could be classified as genotoxic hazardous waste.