This study investigated the feasibility of stabilizing lead sludge by reaction with iron sludge via the formation of PbFe12O19 through a thermal treatment process. Lead hydroxide was used to simulate lead-laden sludge and the sintering procedure was performed by firing a mixture of this simulated sludge together with iron sludge at a Fe/Pb molar ratio of 12 over the temperature range from 650 to 1400 °C. The accompanying phase transformations as well as the surface characteristic of sintered samples were observed by XRD and SEM, while the leaching behavior of the stabilized sludge in an acidic environment was evaluated by a modified Toxicity Characteristic Leaching Procedure (TCLP) test. The results confirmed that PbFe12O19 acts as a stabilization phase for lead, and showed that the formation of a PbFe12O19 phase began at 750 °C with the lead completely incorporated into the PbFe12O19 phase at 1050 °C. Above 1100 °C, the PbFe12O19 phase began to decompose, accompanied by the reappearance of Fe2O3. The volumes of compressed sludge samples were reduced significantly after thermal treatment, with accompanying volume reductions of 40% at 1050 °C. This study compared the leaching of lead from PbO and sintered sludge samples using a prolonged TCLP test, and the data showed that the PbFe12O19 phase was superior to the PbO and that the sintered sludge sample exhibited very high stability under acidic environments. These results suggest a promising and reliable method of reducing lead sludge mobility and toxicity has been identified.