Bio-dimethyl ether (bio-DME) is an environmentally friendly alternative fuel for diesel engines that has several advantages over conventional fossil diesel fuel, such as lower emissions of particulate matter, hydrocarbons, carbon monoxide, and nitrogen oxides. The purpose of this paper is to perform a techno-economic analysis of a novel bio-DME production plant based on sewage sludge gasification. The first part of the work is centred around the modelling of a fixed bed, updraft gasification reactor, which is performed using a multi-scale, multi-phase methodology already tested and validated on biomass feedstock using the GasDS suite, a property package developed at Politecnico di Milano. The gas-solid kinetic model is coupled with a detailed gas-phase kinetic scheme including more than 200 species, and more than 2,000 reactions. The work then illustrates a new process scheme that undergoes techno-economic and sensitivity analyses to understand the most impacting parameters on the feasibility of the process. This procedure is useful to understand if sludge gasification could be considered as an alternative feedstock and a viable option for the future development of a sustainable supply chain for the production of bio-DME. The obtained results are promising, showing productivity of 19.3 kg/h of fuel-grade bio-DME from 100 kg/h of hydrochar with a market-competitive production cost ranging from -0.370 and 0.924 €/kgDME, and an average value of 0.277 €/kgDME.