Hydrothermal carbonization (HTC) of sewage sludge (SS) with and without calcium oxide (CaO) introduction was conducted at 160–240 °C, and the yield and distribution of polycyclic aromatic hydrocarbons (PAHs) were evaluated for the first time. PAHs (2972.99 μg/kg) and toxic equivalent quantity (TEQ) (373.09 μg/kg) yields in SS decreased by 13.61% and 14.65%, respectively, after treatment at 160 °C and substantially increased as temperatures increased. More PAHs were distributed in the hydrochar than in the aqueous products. Hydrochar yields decreased linearly with temperature, thus increasing PAH concentration in hydrochar; 6221.98 μg/kg of PAHs in hydrocar at 240 °C exceeded agricultural use standard limits. PAH and TEQ yields at 200 °C decreased by 5.55–15.98% and 2.88–3.54%, respectively, when 3–9% CaO was added, which could be ascribed to CaO inhibition in the free radical reaction for PAH generation. Additionally, 6% CaO addition substantially weakened the acceleration effect of high temperatures on PAH formation; the decrease of PAH yield at 240 °C was 22.14%, which is higher than that at other temperatures. Consequently, the PAH concentration in hydrochar declined by 2.33–22.37%. PAH content in hydrochar obtained from CaO-assisted HTC of SS fell within agriculture use standard limit and exhibits potential for use as a soil conditioner. However, condition with a CaO amount of 15% would significantly increase TEQ yields. Considering both PAH and TEQ yields and the ecological risks of PAHs in hydrochar derived from HTC of SS, the appropriate reaction conditions were found to be 200 °C with 3–6% added CaO.