Huge amounts of noxious chemicals from coal and petrochemical refineries and pharmaceutical industries are released into water bodies. These chemicals are highly toxic and cause adverse effects on both aquatic and terrestrial life. The removal of hazardous contaminants from industrial effluents is expensive and environmentally driven. The majority of the technologies applied nowadays for the removal of phenols and other contaminants are based on physio-chemical processes such as solvent extraction, chemical precipitation, and adsorption. The removal efficiency of toxic chemicals, especially phenols, is low with these technologies when the concentrations are very low. Furthermore, the major drawbacks of these technologies are the high operation costs and inadequate selectivity. To overcome these limitations, researchers are applying biological and membrane technologies together, which are gaining more attention because of their ease of use, high selectivity, and effectiveness. In the present review, the microbial degradation of phenolics in combination with intensified membrane bioreactors (MBRs) has been discussed. Important factors, including the origin and mode of phenols’ biodegradation as well as the characteristics of the membrane bioreactors for the optimal removal of phenolic contaminants from industrial effluents are considered. The modifications of MBRs for the removal of phenols from various wastewater sources have also been addressed in this review article. The economic analysis on the cost and benefits of MBR technology compared with conventional wastewater treatments is discussed extensively.