Excess sewage sludge in wastewater treatment plants (WWTPs) is regarded the key energy source for achieving energy neutral WWTPs. The anaerobic digestion process transforms sludge-organic matter into methane, which subsequently can be used for heat and electricity production. Conventional anaerobic digesters (ADs) have been used for sludge treatment for many decades, requiring high energy and providing poor effluent quality. Anaerobic membrane bioreactor (AnMBR) technology exhibits a promising option for treatment of high solids concentration streams including sludge. AnMBRs result in an increase in digestion efficiency and enhancement in effluent quality at small footprints. AnMBRs have the potential to reduce capital and operational costs, and produce more energy in comparison to conventional ADs. Thus, energy neutral or positive operation can be achieved with AnMBRs. Besides, nutrient recovery or direct use of permeate will become more feasible in AnMBRs compared to use of sludge supernatant in ADs. However, membrane fouling can limit the feasibility of AnMBRs for sludge treatment, which requires further research. This review paper critically evaluates the current status of AnMBR technology for municipal sludge treatment discussing the effect of different factors on treatment and membrane filtration performances. Furthermore, future research opportunities to enhance applicability of this technology are addressed.