Peroxydisulfate (PDS) is widely used in field-scale remediation of organically polluted soil, yet PDS is detrimental to the soil microbiome. In this work, sludge-derived hydrochar was used to alleviate the oxidative damage of PDS to the soil ecosystem and simultaneously improve atrazine (ATZ) degradation. Response surfaces showed that ATZ degradation was enhanced with an increased dosage of PDS (regression slope of 24.09) and hydrochar (regression slope of 4.19). In contrast, bacterial abundance was negatively related to PDS dosage but positively to hydrochar dosage. At the optimum dosage of PDS (2.21% dry weight of soil) and hydrochar (5% dry weight of soil), ATZ degradation reached 95.31%, and bacterial abundance recovered to 7.72 log gene copy number g−1 soil (versus 8.44 in raw soil). Hydrochar alleviated the negative impacts of PDS on soil fertility such as urease activity. High PDS dosages (3% dry weight of soil) facilitated the proliferation of Halomonas, while moderate dosages (1.5% dry weight of soil) stimulated Alicyclobacillus. Hydrochar facilitated the growth of functional genera like Comamonas, Cloacibacterium, and Terrabacter. ATZ degradation pathway was positively correlated with Bacillus and nitrogen metabolism pathway. Hydrochar mediated intracellular reactive oxidative species scavenger reactions in catalase activity, allowing microbial survival under harsh oxidative conditions due to PDS addition.