The environmentally friendly degradation of and energy recovery from oily sludge is a common concern in both research and industry. In this study, industrial oily sludge was collected after wastewater treatment by oil storage corporations. First, the physical and chemical properties of the samples were observed. Then, samples were analyzed using thermogravimetry-gas chromatography-mass spectrometry under air atmosphere and under nitrogen atmosphere. The characteristics of the residue after thermal decomposition were determined through Fourier-transform infrared spectroscopy, scanning electron microscopy, and energy dispersive spectrometry. The results revealed that the thermal degradation of oily sludge is divided into three steps under nitrogen atmosphere but four steps under air atmosphere. Moreover, thermal decomposition was mainly exothermic under nitrogen atmosphere but endothermic under air atmosphere. The mass loss of oily sludge was greater under air atmosphere. The final residue was 26.6% under an air atmosphere, which was lower than the 35.8% observed under nitrogen atmosphere. The gaseous products of oily sludge included gaseous fuels under nitrogen atmosphere but were only combustion products under air atmosphere. In both atmospheres, the solid products remaining in the residue were the metallic elements Fe, Al, Mg, Na, and Ca, which can be reused in desulfurization applications.