Polyethylene terephthalate (PET) is a plastic material commonly applied to beverage packaging used in everyday life. Owing to PET’s versatility and ease of use, its consumption has continuously increased, resulting in considerable waste generation. Several physical and chemical recycling processes have been developed to address this problem. Recently, biological upcycling is being actively studied and has come to be regarded as a powerful technology for overcoming the economic issues associated with conventional recycling methods. For upcycling, PET should be degraded into small molecules, such as terephthalic acid and ethylene glycol, which are utilized as substrates for bioconversion, through various degradation processes, including gasification, pyrolysis, and chemical/biological depolymerization. Furthermore, biological upcycling methods have been applied to biosynthesize value-added chemicals, such as adipic acid, muconic acid, catechol, vanillin, and glycolic acid. In this review, we introduce and discuss various degradation methods that yield substrates for bioconversion and biological upcycling processes to produce value-added biochemicals. These technologies encourage a circular economy, which reduces the amount of waste released into the environment.