Microorganism communities and chemical characteristics in sludge‐bamboo charcoal composting system were investigated to find the effect of bamboo charcoal on composting. According to a plate count test, abundances of bacteria, fungi and actinomycetes in the treatment with bamboo charcoal were several times higher than those in treatment without bamboo charcoal. In addition, terminal restriction fragment length polymorphism (TRFLP) analysis indicated that the bacterial community diversity in treatment with bamboo charcoal was greater than that of the control. Both results demonstrated that amendment with bamboo charcoal can increase microorganism population and microorganism community diversity in a sludge composting system. Moreover, the results of FTIR spectroscopy disclosed that aerobic composting can promote the formation of surface acid groups on bamboo charcoal. These surface acid groups may deprotonate and react with NH₄ ⁺ to form stable complexes. Therefore, the increase of functional groups accompanied with greater assimilation of nitrogen by microorganisms could reduce nitrogen loss in sludge composting.