Antibiotic residues lead to the risk of resistance gene enrichment, which is the main reason why penicillin mycelial dreg (PMD) is defined as hazardous waste. Hydrothermal treatment (HT) is an effective method to treat penicillin mycelial dreg, but the degradation mechanism of penicillin is unclear. In the study, we researched the effects of pH (4–10) at 80–100 °C and metal ions (Mn2+, Fe2+, Cu2+, and Zn2+) at several concentrations on the HT of penicillin, identified the degradation products (DPs) under different conditions, and evaluated the antibacterial activity of hydrothermally treated samples. The results show that penicillin degradation kinetics highly consistent with pseudo-first-order model (R2 = 0.9447–0.9999). The degradation rates (k) at pH = 4, 7, and 10 were 0.1603, 0.0039, and 0.0485 min−1, indicating acidic conditions were more conducive to penicillin degradation. Among the four tested metal ions, Zn2+ had the most significant catalytic effect. Adding 5 mg·L−1 Zn2+ caused 100% degradation rate at pH = 7 after HT for 60 min. Six degradation products (DPs) with low mass-to-charge (m/z ≤ 335) were detected under acidic condition. However, only two and three DPs were observed in the samples catalyzed by Zn2+ and alkali, respectively, and penilloic acid (m/z = 309) was the main DPs under these conditions. Furthermore, no antibacterial activity to Bacillus pumilus was detected in the medium with up to 50% addition of the treated samples under acidic condition. Even though acid, alkali, and some metal ions can improve the degradation ability of penicillin, it was found that the most effective way for removing its anti-bacterial activity was under the acidic condition. Therefore, resistance residue indicates the amount of additive in the process of resource utilization, and avoids the enrichment of resistance genes.