In the aquaculture sector, wastewater generated is one of the main problems impacting the surrounding environment. Increased aquaculture production implies an increased in waste production and the relevance of these wastes is highly unexploited. Polychaetes might effectively consume these wastes and convert them into high-value nutritional biomass. In such a study exploring the uses of aquaculture generated-waste, the growth and nutritional composition of the polychaete worm Hediste diversicolor (O.F. Muller, 1776) were analyzed. In addition, the capability of H. diversicolor to utilize waste from land-based salmon smolt farms for growth and the nutritional composition of H. diversicolor cultivated on salmon smolt waste was evaluated. The worms were cultured for a period of 30 days and fed on iso-carbonic diets viz. fish feed, smolt waste, microalgae paste, and a 1:5 mixture (based on carbon content) of microalgae paste and smolt waste. It was found that H. diversicolor fed on fish feed grew significantly faster (wet weight basis) than worms grown on the other diets (SGR=0.025 d−1). The least growth was observed in worms fed with a mixture of smolt waste and microalgae (SGR=0.003 d−1). The groups fed on smolt waste and microalgae paste did not show any significant differences in their growths (0.012 d−1vs. 0.014 d−1, respectively). In all the treatments the lipid content ranged between 12 and 16% of DW, where polyunsaturated fatty acids (PUFA) comprise approximately 45% of the total fatty acids. The most abundant fatty acids in the worms were Palmitic acid (C16:0) and eicosapentaenoic acid (C20:5 n-3; EPA). The content of Docosahexaenoic acid (C20:6 n-3; DHA) was found to increase significantly from 1.5% to 4.6–7.8% of the total fatty acids during the experiment for all treatments. In all the treatments, the protein content ranged between 54 and 58% of DW, and the most abundant essential amino acids (EAA) were found to be lysine and leucine. Moreover, the authors calculated that 8% of the smolt production might be accounted for by the potential polychaete biomass produced via recycling smolt waste nutrients. On the whole, this study implies that not only H. diversicolor can be successfully reared on waste sludge from land-based salmon smolt aquaculture, but they also have the ability to convert and accumulate high valuable compounds. Therefore, they can be used to increase the protein and lipid availability and in parallel help in decreasing the harmful environmental impacts due to aquaculture practices.