The increasing interest in renewable energy sources and sustainable waste management has driven research into the pyrolysis of sewage sludge for bio-oil production. This literature review aims to provide a detailed analysis of the physico-chemical properties of bio-oil derived from sewage sludge pyrolysis and its potential industrial applications. Sewage sludge, a byproduct of wastewater treatment, is a rich source of organic material, making it a promising feedstock for bio-oil production via pyrolysis. The review focuses on key factors influencing the yield and quality of bio-oil, including the moisture content, ash composition, and the presence of heavy metals in sewage sludge. Critical bio-oil properties such as viscosity, water content, acidity, and heating value are examined to assess its suitability for industrial use. Furthermore, the challenges of bio-oil stability—especially phase separation and the high oxygen content—are discussed, along with methods to address these issues, such as pre-treatment of sludge and catalytic pyrolysis. The review also highlights the diverse applications of bio-oil, ranging from its use as a combustion fuel in heat and power generation to its role in producing chemicals, adhesives, and resins. By analyzing recent advancements in pyrolysis technology and the optimization of bio-oil production from sewage sludge, this review underscores the potential of sewage sludge as a sustainable feedstock for renewable energy and industrial chemicals, contributing to both energy recovery and environmental management.