Microplastics are known to negatively affect anaerobic digestion (AD) of waste activated sludge. However, whether thermal hydrolysis (TH) pretreatment alters the impact of microplastics on sludge AD remains unknown. Herein, the effect of TH on the impact of polyethylene (PE) microplastics in sludge AD was investigated. The results showed that the inhibition of methane production by PE at 100 particles/g total solids (TS) was reduced by 31.4% from 12.1% to 8.3% after TH at 170 °C for 30 min. Mechanism analysis indicated TH reduced the potential for reactive oxygen species production induced by PE, resulting in a 29.1 ± 5.5% reduction in cell viability loss. In addition, additive leaching increased as a result of rapid aging of PE microplastics by TH. Acetyl tri-n-butyl citrate (ATBC) release from PE with 10 and 100 particles/g TS increased 11.5-fold and 8.6-fold after TH to 68.2 ± 5.5 μg/L and 124.0 ± 5.1 μg/L, respectively. ATBC at 124.0 μg/L increased methane production by 21.4%. The released ATBC enriched SBR1031 and Euryarchaeota, which facilitate the degradation of proteins and promote methane production. This study reveals the overestimated impact of PE microplastics in sludge AD and provides new insights into the PE microplastics-induced impact in practical sludge treatment and anaerobic biological processes.