Treatments for and methods of disposing of municipal sewage sludge have a limited ability to produce high-value products. The number of studies on using sludge for energy recovery—including those that use sludge lipids to produce biodiesel—has increased considerably. This study reviews and compares methods for all steps in the process of producing biodiesel from municipal wastewater sludge, including sludge pretreatment and lipid extraction methods, catalyst selection, and byproduct generation, and its economics analysis. Sludge drying by heat maybe the most efficient method but cost a lot, and drying by vacuum and chemicals are expected for future advancement. In the lipid extraction, organic solvents are costly and unfavorable to the environment. Therefore, alternative extractant that are more efficient, and environmentally friendly are of potential use but still need price reduction. In terms of catalysts, H2SO4 is an efficient and cheap catalyst in practical use but consumes a lot in operation. Solid acid catalysts are promising alternatives because of cost saving and environmental benign. Some new catalysts such as ionic liquid and enzymes are just promising in the much further future. The byproducts of different biodiesel production processes have been classified and been made downstream and environmental risk analysis. The optimization and greenness of catalysts and byproducts promote the commercialization of sewage sludge for biodiesel production. In addition, biodiesel refining by membrane technique is promising. Display omitted •Sludge biodiesel production processes are reviewed and compared.•Solid acid catalysts are promising alternatives for H2SO4.•Byproducts classified, downstream oriented and environmental risk analyzed.