By-products from zinc hydrometallurgy are classified as hazardous waste with strong leaching toxicities. Even though numerous research papers are dedicated to valorizing valuable metals in it, the primary management route is still disposal or partial reuse, such as the Waelz process. Presented experimental research investigates possibilities of sulfidization and further processing as a technologically sustainable route for valuable metals valorization from non-standard jarosite-PbAg sludge. The comprehensive thermodynamic analysis was done by HSC Chemistry®, through optimizing process parameters, i.e., temperature, sulfur addition, and selection of possible additives. Technological possibility of magnetic separation, flotation, and smelting of sulfidized material was also investigated; the results were below the values that allow practical application, due to the obtained texture of sulfidized jarosite, which does not allow the liberation of minerals. Smelting tests were performed on sulfidized jarosite with sulfur and without and with carbon as additive. By smelting sulfidized jarosite-PbAg sludge with added carbon in sulfidization stage at 1375 °C, obtained products were matte, slag, raw lead, and dust in which base, critical, and slag forming components were valorized. Valuable metals were concentrated in smelting products so as to enable further processing, which also could be interesting in the case of treatment of complex, polymetallic, and refractory primary materials, which represent a significant contribution to the circular economy.