•Pre-treatment methods of MSS are analyzed and the effect of different solvents on the extraction of lipids was discussed.•State-of-art of biofuel production from sewage sludge is critically presented.•Parametric optimization efforts for efficient biodiesel production were summarized.•Attempts on kinetics of transesterification reaction and intensification of biodiesel production were analyzed.•Quality of biodiesel and process economics were discussed. Bio-fuels are gaining worldwide attention as an alternative fuel option replacing the usage of the mineral diesel derived from conventional fossil sources. However, the high cost attributed by the feedstock made it less competitive with the commercial diesel. A widespread research is going on worldwide for the production of fuels from renewable biomass replacing the currently used traditional sources. The high lipid-containing municipal sewage sludge (MSS) can be considered as a potential feedstock owing to its low cost and abundant availability. The lipids are transformed to biodiesel via transesterification or to bio-oil by pyrolysis. In this review paper, a comprehensive discussion on the various aspects of bio-fuel production from sludge derived lipids along with the key parameters affecting the process and its economics are presented. This review also emphasizes that future studies should focus on the usage of modern process intensification techniques for more efficient production of bio-fuel from renewable biomass.