As a by-product of wastewater treatment, sludge has dual attributes of pollutant and resource. Proper disposal of sludge is significant for reducing pollution and carbon emissions in sewage treatment. The sludge treatment in China has shifted from emphasis on wastewater treatment over sludge treatment to equal emphasis on sludge and wastewater treatment, and the technologies and standards system have been rapidly developed. However, against the background of carbon peaking and carbon neutrality, there remain shortcomings in sludge treatment in China. In this paper, we reviewed the current status of slug treatment in China from the aspects of urban sludge production and characteristics, slug treatment technologies, and policy and standards systems, and summarized the prominent problems of slug treatment in terms of management system, technical standards, and routes selection. Considering the development stage and international development trends, we proposed a development concept of “green and lowcarbon, resource recycling, environmental friendliness, and adapting measures to local conditions.” Corresponding key measures are also proposed. Specifically, the top-level design should be strengthened to coordinate facility planning and layout, and treatment routes should adapt to local conditions. The standards system and price subsidy mechanism for sludge treatment should be improved to clarify the division of responsibilities and strengthen the supervision mechanism. The integration level of the whole chain should be promoted by strengthening the weaknesses to form a technology model that can be applied widely. Research on frontier technologies should be conducted to innovate and upgrade the technologies and equipment for sludge disposal and recycling.