Aflatoxin B1 (AFB1) is among the most potent genotoxic and carcinogenic mycotoxins and is a major source of distress for the growing poultry sector. On the other hand, distillery yeast sludge or distillery sludge (DS) is a byproduct of molasses-based industries. It is often treated as a waste despite containing abundant nutrients particularly protein, basic amino acids, and vitamins along with other macro and micronutrients. This study was designed to investigate the oxidative stress and immunological alterations induced by AFB1 and their amelioration by dietary supplementation with DS. For this purpose, 360 newly hatched broiler chicks were randomly divided into twelve groups (30 birds each) and fed different combinations of AFB1 (100, 200, or 600 µg/kg) and DS (5 or 10 g/kg) for 42 days. The parameters under consideration were body weight, feed conversion ratio (FCR), relative organ weights, histopathological examination of different visceral organs, total antioxidant capacity, antibody response to intravenous injection of sheep red blood cells, in situ lymphoproliferative response to phytohemagglutinin-P, and phagocytic potential through a carbon clearance assay system. The results of this study established that DS supplementation ameliorated AFB1-associated oxidative stress and ameliorated toxicopathological and immunological anomalies in groups given AFB1 at 100 µg/kg and 200 µg/kg; however, little to no relief was observed in birds fed AFB1 at 600 µg/kg. The determination of the actual ratio of the AFB1 to the DS for substantiating the ameliorating effects requires further investigation.