Cadmium (Cd) is present in significant levels in waste activated sludge, but its potential toxicities on anaerobic fermentation of sludge remain largely unknown. This work therefore aims to provide such support. Experimental results showed that the impact of Cd on short-chain fatty acids (SCFA) production from sludge anaerobic fermentation was dose-dependent. The presence of environmentally relevant level of Cd (e.g., 0.1 mg/g VSS) enhanced SCFA production by 10.6%, but 10 mg/g VSS of Cd caused 68.1% of inhibition. Mechanism exploration revealed that although all levels of Cd did not cause extra leakage of intracellular substrates, 0.1 mg/g VSS Cd increased the contents of both soluble and loosely-bound extracellular polymeric substances (EPS), thereby benefitting sludge solubilization. On the contrary, 10 mg/g VSS Cd decreased the levels of all EPS layers, which reduced the content of soluble substrates. It was also found that 0.1 mg/g VSS Cd benefited both the hydrolysis and acidogenesis but 10 mg/g VSS Cd inhibited all the hydrolysis, acidogenesis, and methanogenesis processes. Further investigations with microbial community and enzyme analysis showed that the pertinent presence of Cd enhanced the activities of protease, acetate kinase, and oxaloacetate transcarboxylase whereas 10 mg/g VSS Cd decreased the microbial diversity, the abundances of functional microbes, and the activities of key enzymes. Finally, one strategy that could effectively mitigate the adverse impact of high Cd levels on SCFA production was proposed and examined. This work provides insights into Cd-present sludge fermentation systems, and the findings obtained may guide engineers to manipulate sludge treatment systems in the future.