The petroleum industry is faced with the problem of developing an environmentally friendly recovery technology for oily sludge. This article examines the present status of oily sludge treatment: sludge reduction, sludge stabilization, and sludge reclamation. Finally, we discuss the prospects for development of oily sludge treatment.Oily sludge is a mixture of petroleum residues and sand generated during exploration and development of oil fields and also in petrochemical production. Considerable problems are encountered in oily sludge treatment [1]. Oily sludge contains not only a significant amount of petroleum residues but also benzene, phenol, anthracene, pyrene and other malodorous toxic substances. The accumulated huge volume of oily sludge not only takes up considerable land but also pollutes the soil, water, and air [2]. Oily sludge also contains a large number of pathogens, parasites, copper, zinc, chromium, mercury and other heavy metals, salts, polychlorinated biphenyls (PCBs), dioxins, radioactive and other persistent hazardous compounds. Oily sludge not only pollutes the environment but also is a waste of resources if not effectively treated to recover the hydrocarbons in it [3]. Therefore, oily sludge has been a major problem that plagues the petroleum and petrochemical industry [4].Crude oil extraction, oil and gas gathering and transportation, and refinery wastewater treatment will produce large amounts of oily sludge. Because different types of oily sludge are generated by the different types of operations, there is no single oily sludge treatment technology. Therefore, in this paper we review existing technologies for oily sludge treatment as a contribution to better understanding of current treatment technology and to assist in development of new treatment technology.