Biomass energy recovery from sewage sludge through anaerobic treatment is vital for environmental sustainability and a circular economy. However, large amounts of pharmaceutical and personal care products (PPCPs) remain in sludge, and their interactions with microbes and enzymes would affect resource recovery. This article reviews the effects and mechanisms of PPCPs on anaerobic sludge treatment. Most PPCPs posed adverse impacts on methane production, while certain low-toxicity PPCPs could stimulate volatile fatty acids and biohydrogen accumulation. Changes in the microbial community structure and functional enzyme bioactivities were also summarized with PPCPs exposure. Notably, PPCPs such as carbamazepine could bind with the active sites of the enzyme and induce microbial stress responses. The fate of various PPCPs during anaerobic sludge treatment indicated that PPCPs featuring electron-donating groups (e.g., •−NH 2 and •−OH), hydrophilicity, and low molecular weight were more susceptible to microbial utilization. Key biodegrading enzymes (e.g., cytochrome P450 and amidase) were crucial for PPCP degradation, although several PPCPs remain refractory to biotransformation. Therefore, remediation technologies including physical pretreatment, chemicals, bioaugmentation, and their combinations for enhancing PPCPs degradation were outlined. Among these strategies, advanced oxidation processes and combined strategies effectively removed complex and refractory PPCPs mainly by generating free radicals, providing recommendations for improving sludge detoxification.