The proper treatment and utilization of oily sludge (OS) and incineration fly ash (IFA) remains a significant challenge due to their hazardous nature. To attain effective recovery of petroleum hydrocarbons and synergistic disposal, this study investigated the co-pyrolysis of OS and IFA, resulting in successful energy recovery, CO₂ mitigation, and heavy metal immobilization. Results revealed that the peak ratio of light oil to heavy oil fractions reached 179.42% with 20 wt% IFA addition, accompanied by the highest aromatic hydrocarbons selectivity of 30.72% and the lowest coke yield of 106.13 mg/g OS under the optimal temperature of 600°C. In-depth analysis indicated that IFA inhibited the poly-condensation of macromolecular PAHs and promoted their cracking into light aromatic hydrocarbons. The addition of 50 wt% IFA significantly increased H₂ yield (21.02 L/kg OS to 60.95 L/kg OS) and facilitated CO₂ sequestration due to its higher content of Ca-bearing minerals. Moreover, high IFA ratios promoted the reduction of Fe species in OS to a low-valence state. Heavy metals in co-pyrolysis char were well immobilized into stable fractions with lower environmental risks. This work highlights the potential of co-pyrolysis as a viable approach for simultaneous disposal of multiple hazardous wastes and offers new insights for their utilization.