In a recycling process, granulated plastic material coated with a paint film is melted in an extruder. During extrusion, the paint film is volatilized and removed by vacuum from the melted granulate stream. Additives are admixed with the particulates and any remaining paint film in an extruder. Water is introduced into the melted plastic stream in the extruder to neutralize toxic material levels discharged from the extruder and from the extruded plastic material.