The generation of oily sludge and petroleum wastewater is the primary pollutant associated with the petroleum industry. Without adequate treatment, discharged petroleum wastewater effluent and oily sludge can disturb aquatic ecosystems, contaminate the environment, and are considered carcinogenic and detrimental to human health. Over 80% of waste effluents produced worldwide are dumped into aquatic bodies without undergoing any prior treatment, raising concerns about the direct discharge of petroleum effluent into the environment without removing or lowering hazardous contaminants. Industries must treat their effluent before discharging it into the environment. Conventional systems for treating petroleum wastewater and oily sludge have demonstrated significant shortcomings, such as low efficiency, high capital, and operating costs, and they typically produce toxic secondary waste streams, nonbiodegradable substances, and high volumes of sludge. In this investigation, novel methods and environmentally friendly techniques for treating petroleum wastewater while minimizing or eliminating secondary pollution will be explored. Conventional and current physical, physicochemical, chemical, biological, and integrated petroleum wastewater treatment technologies were discussed. In addition, several techniques to tackle petroleum hydrocarbons in oily sludge have been investigated. These technologies were classified into oil recovery, sludge disposal and remediation methods, along with the benefits and limitations as well as the improvements that have been made to make them more environmentally sustainable. This research not only adds value by highlighting sustainable wastewater treatment technologies but also sheds light on ways to valorize the waste streams produced to offset the frequently high treatment costs.