Degradation of petroleum hydrocarbons (PHs) contents of oily waste sludge (OWS) is necessary in order to prevent the related environmental pollution. The present study aimed to investigate the degradation of total petroleum hydrocarbons (TPHs) from OWS using bioaugmentated composting (BC) with hydrocarbon-degrading bacterial consortium (HDBC) as pre-treatment followed by vermicomposting (VC) by Eisenia fetida. After isolating two indigenous bacterial strains from OWS, the ability of their consortium in degradation of crude oil was tested in Bushnell-Haas medium (BHM). Then, biodegradation of OWS was measured in the VC alone, BC alone, simultaneous BC and VC (BCVC), and BC followed by VC (BCFVC) containing high levels (30 g/kg) of TPHs. Toxicity tests including the mortality of mature earthworms and the numbers of juveniles were conducted at the TPHs of 0–40 g/kg. The obtained results indicated that the HDBC removed 18–64 % of TPHs of crude oil (1–5 %) in BHM after 7 days of incubation. After a period of 12 weeks, the removal rates of TPHs in the VC, BC, BCVC, and BCFVC experiments were 23.7, 79.5, 85.2, and 91.8 %, respectively, verifying the efficacy of simultaneous application of HDBC and worms in bioremediation of OWS. The TPHs contents of OWS exhibited toxic effects on E. fetida at some concentrations and the median lethal concentration (LC50) of TPHs was computed to be 14.5 g/kg after 28 days. This study demonstrated the effectiveness of composting bioaugmentated with HDBC as a pre-treatment step followed by vermicomposting in bioremediation of OWS.