Paper waste sludge (PWS) generated by the pulp and paper industry is a cellulose-rich residue that remains largely underutilized and presents disposal challenges. In this study, an integrated chemical–biological process was developed to valorize PWS into high-value bacterial cellulose (BC) through sulfuric acid–catalyzed hydrolysis followed by fermentation with Acetobacter xylinum. The hydrolysis step was statistically optimized using a Box–Behnken design to evaluate the effects of solid-to-liquid ratio, sulfuric acid concentration, temperature, and reaction time on reducing sugar production. The optimal hydrolysis conditions were identified as a solid-to-liquid ratio of 1:31.2, sulfuric acid concentration of 8.17%, temperature of 91.3 °C, and reaction time of 6.15 h, yielding a reducing sugar concentration of 11.12 g/L with a hydrolysis efficiency of 60.64%. The resulting hydrolysate was directly utilized as the fermentation substrate without detoxification, leading to BC production of approximately 10 g/L and a sugar-to-cellulose conversion efficiency of 49.65%. Structural characterization by SEM, XRD, and FTIR revealed that the BC exhibited a dense nanofibrillar matrix, high purity, and a crystallinity index of 84%, comparable to BC produced from refined carbon sources. A simplified mass balance and preliminary economic assessment further indicated effective carbon transfer from PWS to BC, low chemical cost contribution, and compatibility with existing sludge management practices. Thus, this work demonstrates a technically robust and scalable approach for converting paper waste sludge into high-performance bacterial cellulose, supporting the valorization of industrial waste into value-added biopolymers within a circular bioeconomy.