Only 1–2 percent of discarded dry batteries are recovered in China. It is necessary to find an economic and environmentally friendly process to recycle dry batteries in this developing country. Bioleaching is one of the few techniques applicable for the recovery of the toxic metals from hazardous spent batteries. Its principle is the microbial production of sulphuric acid and simultaneous leaching of metals. In this study, a system consisting of a bioreactor, settling tank and leaching reactor was developed to leach metals from nickel–cadmium batteries. Indigenous thiobacilli, proliferated by using nutritive elements in sewage sludge and elemental sulphur as substrates, was employed in the bioreactor to produce sulphuric acid. The overflow from the bioreactor was conducted into the settling tank. The supernatant in the settling tank was conducted into the leaching reactor, which contained the anode and cathodic electrodes obtained from nickel–cadmium batteries. The results showed that this system was valid to leach metals from nickel–cadmium batteries, and that the sludge drained from the bottom of the settling tank could satisfy the requirements of environmental protection agencies regarding agricultural use.