Oily wastewater has been recognized as a threat to the environment due to its hazardous nature and it can negatively affect the ecosystem, and threaten wildlife and human health. Physical, chemical, and biological technologies demonstrated a mixed performance in oily wastewater treatment, and, therefore, a proper treatment technology for oily wastewater needs to be addressed. Membrane filtration using a hollow fiber (HF) membrane is a promising alternative to remove emulsified oil from oily wastewater. This review discusses different sources of oily wastewater, various treatment methods, and membrane technology. The assessment has been focused on the parameters affecting HF membrane performance and applications of HF membrane-based technology to treat oily wastewater. This review paper reveals that HF membrane filtration systems have been previously used for the treatment of oily wastewater in bench-scale studies and few pilot-scale applications, which proved to be favorable in the treatment of recalcitrant wastewater containing oil and high salinity. Limitations associated with membrane fouling and the reduction of membrane permeability and membrane lifespan can be tackled and alleviated through modifying membrane chemistry and adjusting operational parameters. The compilation of studies showed that a low food/microorganism (F/M) ratio, long solid retention time (SRT) with high sludge age, long hydraulic retention time (HRT), and moderate aeration were the preferred operational parameters when treating oily wastewater. Based on this review, future studies should focus on optimizing the hydrodynamic conditions of the HF system, the commercialization of modified HF membranes, and the utilization of green technology in HF membrane construction to broaden HF membrane technology applications.