We investigated alleviation of Cd toxicity and changes in the physiological characteristics of Betula schmidtii seedlings following application of composted sewage sludge to Cd-treated plants. Plants were grown under four test conditions: control, Cd treatment, sludge amendment, and Cd treatment with sludge amendment. B. schmidtii treated with Cd only accumulated the greatest amount of Cd in the leaves, but absorbed Cd was also highly concentrated in the roots. In contrast, Cd concentrations in the Cd and sludge amendment treated seedlings were the lowest in the roots. Since sludge amendment increased the growth of seedlings, it may have alleviated toxicity by dilution of Cd. Additionally, the absorbed Cd was more widely distributed since it was transported from the roots and accumulated in the stems and leaves of Cd and sludge treated plants. Cd treatment inhibited the growth and physiological functions of B. schmidtii seedlings, but sludge amendment compensated for these effects and improved growth and physiological functions in both Cd-treated and control plants. SOD activity in the leaves of seedlings was increased in the Cd-treated plants, but not in the Cd and sludge amendment treated seedlings. In conclusion, alleviation of Cd toxicity in response to sludge amendment may be related to a dilution effect, in which the Cd concentration in the tissues was effectively lowered by the improved growth performance of the seedlings.