Hydrothermally treated sewage sludge was pyrolyzed at temperatures of 300, 500, and 700 °C with antibiotic mycelial residue addition ratios of 0, 10, 25, and 50 wt%. The results showed that co-pyrolysis could obviously improve biochar properties. Specifically, adding antibiotic mycelial residue increased the aromaticity and raised the higher heating value of the biochar, which indicates its better potential as fuel. The enrichment in functional groups improved the surface properties of biochar, indicating its better applicability. Additionally, the heavy metal concentrations in biochar were diluted by adding antibiotic mycelial residue, which led to lower toxic inputs to the environment. Moreover, heavy metals were transformed to more stable fractions after co-pyrolysis. A higher pyrolysis temperature and greater antibiotic mycelial residue amounts led to better immobilization of heavy metals, thus preventing their leaching to the environment. This work proposes a promising technique for the synergetic treatment of sewage sludge and antibiotic mycelial residue for improved biochar formation.