During the past decades, ultrasonic technology has gained wide interest as an effective mechanical pretreatment method for sludge, due to its excellent performance, good technical and operational stability, compactness, and environmentally friendly processing. This review is intended to provide an overview on the applications of ultrasonics in sludge solubilization and subsequent digestion, sludge sanitization, enhancement of enzymatic activity, resource recovery, extraction of chemicals, ultrasound assisted lysis–cryptic growth, and degradation of hazardous pollutants. Moreover, the working mechanisms behind the treatment and the influence of various process conditions, including power density/intensity, specific energy input, ultrasonic frequency, duration of ultrasonication (i.e., partial and complete ultrasonication, solids concentration, and type of sludge on the ultrasonic processing of sludge is specifically emphasized. Also, a discussion is included on the future research directions, an economical assessment of ultrasonic technique, and feasibility of full-scale implementation.