Linz‐Donawitz sludge (LDS) are the microsized solid particles that are recovered after wet cleaning of the gas emerging from basic oxygen furnace during steel making. This article reports on the development of a new class of thermoset polymer composites filled with this industrial waste called LDS. It includes processing, characterization and solid particle erosion wear of epoxy composites filled with different proportions (0, 5, 10, 15, and 20 wt%) of LDS by solution casting technique. The solid particle erosion wear tests are performed on the prepared epoxy‐LDS composite specimens as per ASTM G76 using Taguchi's Orthogonal Arrays followed by the parametric appraisal of the wear process by Response Surface Methodology (RSM). A theoretical model is developed to estimate the erosion rate of these composites under different test conditions. The results obtained from the proposed theoretical model are found to be in good agreement with the experimental values under similar test conditions. Both Taguchi's analysis and RSM suggest that the filler content and the impact velocity are the most significant factors affecting the erosion rate of the composite specimens. POLYM. COMPOS., 39:E2283–E2297, 2018. © 2017 Society of Plastics Engineers