Simultaneous nitrogen removal and toxicity reduction are critical for safe reuse of wastewater, but research in this area is limited. In this study, micro-electrolysis and sulfur-based denitrification biofilters (DNBFs) were applied for simultaneous nitrogen removal and toxicity reduction for municipal wastewater. When COD was 250 ± 1 mg/L, NO3–-N was 50 ± 1 mg/L, total nitrogen (TN) of effluent was below 5 mg/L with the nitrogen load of 0.149 kg N/(m3·d) in all the reactors, while the effect of electrolysis on TN removal was not obvious. Micro-electrolysis promoted toxicity reduction by 8.7–17.4% only in sulfur-based DNBFs, and it also increased biofilm PN/PS by 7.56–43.46% and enhanced Cloacibacterium’s abundance responsible for toxicity reduction (p < 0.05). Introduction of sulfur resulted in the contribution of sulfur-based autotrophic denitrification up to 21.48% and Sulfurimonas mainly contributed to toxicity reduction (p < 0.05).