To eliminate the negative effect of soil contamination with heavy metals on plant growth and crop yield, different methods and techniques are the subject of discussion and study. In this study, we aimed to evaluate the effect of secondary pulp and paper-mill sludge application to soil on the response of the main physiological processes such as the growth, photosynthesis, and respiration of lettuce (Lactuca sativa L.) plants to soil contamination with Pb. For the pot experiment, Pb was added to sandy loam soil at concentrations of 0, 50, and 250 mg Pb(NO3)2 per kg of the soil, and secondary sludge was added to a 0, 20, or 40% sludge solution during each plant watering. The Pb-mediated change in plant biomass allocation, decrease in the photosynthetic rate, increase in leaf respiration rate, and the degree of light inhibition of respiration were closely associated with increases in both root and shoot Pb content. For the Pb-free soil condition, secondary sludge application contributed to the allocation of plant biomass towards a greater accumulation in the shoots than in the roots. Although stomatal opening was not affected by either Pb or sludge, sludge application increased photosynthetic CO2 assimilation regardless of soil Pb content, which was associated with an increase in the electron-transport rate and carboxylase activity of Rubisco. Soil contamination with Pb significantly increased the ratio of respiration to photosynthesis, reflecting a shift in the carbon balance toward carbon losses in the leaves, but sludge application modified the coupling between the processes with a decrease in the proportion of respiratory carbon losses. The sludge-mediated recovery of the physiological processes of L. sativa reflected an increase in plant tolerance to soil contamination with heavy metals, the formation of which is associated with plant and soil adjustments initiated by secondary sludge application.