Sludge is a complex emulsion of various petroleum hydrocarbons (PHCs), water, heavy metals, and solid particles. Polycyclic aromatic hydrocarbons (PAHs), which are components of crude oil sludge, constitute serious environmental concerns, as many of them are cytotoxic, mutagenic and potentially carcinogenic. It also affects the soil fertility. Treatment of oil sludge includes physical, chemical and biological process but still cost effective method is needed. Composting can serve as remedy to treat the sludge provided factors such as nutrients, pH, moisture, aeration and temperature within the compost pile. For maintaining the humidity different bulking agent can be used. High microbial diversity and activity during composting, due to the abundance of substrates in feedstocks, promotes degradation of xenobiotic organic compounds, such as pesticides, polycyclic aromatic hydrocarbons (PAHs), and polychlorinated biphenyls (PCBs). Microorganisms can also bio transform pollutants into less toxic substances. The exhaustive investigation of oily sludge treatment methods will provide researchers to have a thorough understanding of recent developments and future research directions.