Sphagnum peat is a finite resource that is often used in the horticultural industry as a component in many substrates, especially for greenhouse production of transplants. Because peatlands are being depleted by vast amounts of mining, the horticultural industry is exploring alternative resources to use in substrates. Swine lagoon sludge (SLS) is an attractive option as it may provide nutrients needed to support plant growth, as well as using an agricultural waste product to address the peat shortage. A compost was developed using an in-vessel compost reactor to compost SLS with peanut hulls [15:85 (by volume) SLS:peanut hull] to produce a swine lagoon compost (SLC). A greenhouse transplant study was conducted with three species: basil (Ocimum basilicum ‘Dark Opal’), chives (Allium schoenoprasum), and dill (Anethum graveolens ‘Hera’) grown in three substrates: SLC, a commercially available organic potting substrate with a nutrient charge (OM), and a commercial peat-based potting substrate with a 2-week nutrient charge (PEAT). The average height for basil, chives, and dill was significantly greater at transplant harvest when produced in the SLC substrate compared with the OM and PEAT. Airspace was greatest for SLC and lowest for OM and PEAT. Although root growth was not measured in this study, more prolific root growth throughout the plug was observed with SLC compared with OM and PEAT possibly because of the greater airspace in SLC. Substrate solution pH did not change substantially over time, whereas electrical conductivity (EC) decreased from 0.24 to 0.14 mS·cm−1. Both substrate pH and EC were within acceptable ranges for transplant production. SLC provided the physical and chemical requirements for herb transplant production without any additional fertilizers or amendments.