Developing eco-friendly, economical, and efficient catalytic systems for pollutant removal has become an imperative orientation in water treatment. Conversion of municipal sludge into multifunctional biochar has been considered as a feasible strategy for dual applicability in water treatment and sludge management. Herein, municipal biological and ferric sludge were recycled to synthesize an iron-based biochar (Fe4SBC1-800) with great magnetic separation performance (Ms = 29.96 emu g−1). The mixed sludge-derived biochar (Fe4SBC1-800) engaged as an efficient catalyst of peroxymonosulfate (PMS), which efficiently promoted the pollutants elimination including typical azo dye and several antibiotics and anti-inflammatory drugs. The enhanced degradation performance primarily originated from the formation of reactive radicals and non-radical species. The respective and synergetic mechanisms of biochar and supported iron species on PMS activation were verified based on experimental results and theoretical computations. The carboxyl groups served as the major active sites of biochar that donated electrons to PMS for •OH and SO4•− formation. The supported FeO species further boosted the activation capability: (i) the enhanced formation of radicals and FeIV = O via heterogeneous Fenton-like reactions; (ii) the promoted oxygen reduction for O2•− formation by promoting electron transfer from PMS to the FeO species through high sp2-hybridized biochar. Overall, this study innovatively proposed a sustainable and efficient activation system for PMS by iron-based magnetic biochar, which systematically probed the activation mechanism and reconsidered the role of the supported iron species in the iron-based biochar/PMS system.