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Apart from protecting the environment from undesired waste impacts, wastewater treatment is a crucial platform for recovery. The exploitation of suitable technology to transform the wastes from pulp and paper industries (PPI) to value-added products is vital from an environmental and socio-economic point of view that will impact everyday life. As the volume and complexity of wastewater increase in a rapidly urbanizing world, the challenge of maintaining efficient wastewater treatment in a cost-effective and environmentally friendly manner must be met. In addition to producing treated water, the wastewater treatment plant (WWTP) has a large amount of paper mill sludge (PMS) daily. Sludge management and disposal are significant problems associated with wastewater treatment plants. Applying the biorefinery concept is necessary for PPI from an environmental point of view and because of the piles of valuables contained therein in the form of waste. This will provide a renewable source for producing valuables and bio-energy and aid in making the overall process more economical and environmentally sustainable. Therefore, it is compulsory to continue inquiry on different applications of wastes, with proper justification of the environmental and economic factors. This review discusses current trends and challenges in wastewater management and the bio-valorization of paper mills. Lignin has been highlighted as a critical component for generating valuables, and its recovery prospects from solid and liquid PPI waste have been suggested., (© 2022. The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature.)