Due to rapid increase in urbanization generation rate of sludge is expected to reach over 60 million tonnes hence its proper management has become necessary more than ever. Although, sludge is a complex mixture substance having high moisture content, low energy density and possesses several pollutants but it is also a carbon rich material having potential of resource utilization which attracts many thermochemical techniques to convert it into high value product. Hydrothermal carbonization (HTC) is an efficient pre-treatment technique of converting moisture waste material to high value product with low energy consumption. Phosphorus and nitrogen are major nutrients for agriculture and due to HTC, they can be recovered from hydrochar (HC) as well as process water depending on various conditions. Secondly, the presence of heavy metals is limiting the applicability of sludge-derived HC as soil conditioner and they can be easily transferred to human beings via crops. High ash content in sludge-derived HC is disadvantageous for using it as a fuel. Therefore, this review paper critically discusses transforming mechanism and speciation of nutrients and heavy metals (HMs) for fully utilization of sludge through HTC and how additives (oxides, acids and inorganics) are affecting behavior of nutrients and HMs is systematically discussed. In the end, future perspectives have been discussed for its efficient utilization.