Nanoscale zero-valent iron (NZVI), which is increasingly used for environmental remediation, has potential positive impact on Anaerobic Digestion (AD). In this study, the changes of three phases in the AD of sludge have been analysed. The addition of NZVI (1000 mg/L) in the experimental reactors resulted in an enhanced operational performance, i.e. TCOD, SCOD removal and biogas production increased by 23.13%, 12.60% and 29.55% respectively. The addition of NZVI also kept pH at an appropriate level, enhanced the use of volatile fatty acids (VFAs) and the activity of the characteristic enzyme relative to the blank group. The Scanning Electron Microscope (SEM) and Energy Dispersive Spectrometer (EDS) were employed to investigate the changes in surface morphology and elements of the sludge. The infrared spectra analysis showed that NZVI promoted AD of sludge. The results from the three-phase change reflected that the addition of NZVI not only promoted AD of sludge but also improved the resource utilization of sludge.