Anaerobic digestion (AD) is a promising method for treating organic waste while producing bioenergy and nutrient-rich fertilizer. Since the biogas generated from organic waste could replace fossil fuel use and the nutrients could be more efficiently recovered compared to composting, the AD process is essential for the development of a sustainable and circular economy. Agricultural residue is generated in large amounts worldwide and shows enormous potential for bioenergy generation. However, the high lignocellulose content restrains its biodegradability and limits its methane productivity during AD. Therefore, optimization of operating parameters and development of enhancement methods have been widely studied to enhance methane production from agricultural residue. In addition, the efficient utilization of anaerobic digestate has also been extensively studied to maximize nutrient recovery efficiency and prevent environmental and economic impacts of the AD process. This chapter summarizes the important factors, microbial mechanisms, and enhancement strategies for AD of agricultural residue and the potential utilization of anaerobic digestate, aiming to provide a comprehensive understanding and future perspectives of sustainable AD practices.