Distillery sludge is an easy source of plant nutrient but its fertilizer value can vary considerably. In the present study anaerobically digested distillery sludge was applied to agricultural soils and its effect on soil biological and biochemical properties was evaluated. The sludge treatments were comprises of 0, 10, 50, 100 and 150 t ha-1 as single application in an agricultural field and tested for six months. Microbial respiration, microbial biomass carbon, FDA hydrolysis, phosphatase, urease and dehydrogenase activity were evaluated temporally throughout the incubation time for different amount of distillery sludge amendments. These parameters were sensitive enough to show the effect of distillery sludge application on soil microorganisms. The results revealed that sludge application at different rates initially increased the microbial activity, its highest activity was found between 30 and 60 days after application when sludge was applied at the rate of 150 t ha-1 but afterwards the microbial activities decreases gradually. Results show that at high dose soil microbial number increases but the diversity of soil microbial population decreases. Aerobic heterotrophic and symbiotic nitrogen fixing bacteria seems to be more sensitive to sludge addition and shows a marked decrease in population on higher doses. The results also shows that the sludge from distillery wastewater treatment plant may have potential as a beneficial soil amendment up to certain extent for improving biological properties of the soil but at higher doses its contamination can create harm for the beneficial soil inhabitant microbial population and their activities.