This study investigates the influence of extracellular polymeric substances (EPS), recovered from wastewater sludge, on the flame-retardant and mechanical properties of wool-based fibreboards. The thermal properties of wool, resin, and EPS were analysed using thermogravimetric analysis and differential scanning calorimetry to determine manufacturing parameters and assess their impact on the thermal decomposition of the fibreboards. A specialised fibreboard manufacturing setup, incorporating a drum mixer, tube blender, and hot press, was developed to fabricate the composite boards. Results indicate that increasing the hot-pressing time enhances both flexural and internal bond strength. The incorporation of EPS significantly improves the internal bond strength compared to fibreboards without the biopolymer. Moreover, the combined effects of wool and EPS promote effective char formation and lead to a V-0 rating, showing self-extinguishing behaviour in vertical burn tests. Cone calorimeter analysis reveals that while EPS contributes to a reduction in the heat release rate, its effect reaches a saturation point. However, the fire growth index, along with barrier and protective effect values, demonstrates that EPS effectively mitigates fire spread and propagation. These findings highlight the potential of wastewater-derived EPS as a sustainable additive for enhancing the fire resistance and mechanical integrity of wool-based fibreboards.