The challenge of paper sludge disposal has become an important environmental issue; therefore, the combustion characteristics of paper sludge need to be examined. In this paper, the combustion of paper sludge particles under different atmospheres was analysed and investigated using a flat flame burner and optical observation techniques under fast temperature rise conditions. The combustion of paper sludge could be divided into a preheating stage, volatile combustion stage, and coke combustion stage. The changes in oxygen content had different effects on the different stages of combustion. The increase in oxygen content had no significant impact on the ignition time of the sludge particles; however, the flame brightness significantly increased. The CH* free radical appeared in the most intense stage of combustion and was depleted before the volatile flame disappeared. A higher oxygen content correlated to a faster CH* depletion. The influence of the oxygen content on the combustion rate and burnout degree of the sludge particles was investigated by comparing mass loss data and heating data. The maximum temperature and heating rate also increased with increasing oxygen content. The reduced oxygen concentration could not fully penetrate the ash layer on the surface of the particles and react with the interior sludge, resulting in a lesser degree of sludge particle burnout.