Oily sludge from gas processing facilities contains components that are major environmental pollutants. Biodegradation is an alternative treatment, but can be affected by other components of the sludge, such as sulphur compounds, so it is important to evaluate the effect of these on oil biodegradation in order to prevent negative impacts. This work studied the transformation of sulphur compounds in oily sludge biodegradation systems at the microcosm level. The predominant sulphur compounds in the original sludge were elemental sulphur and pyrite (9,776 and 28,705.4 mg kg−1, respectively). In the biodegradability assays, hydrocarbon concentrations decreased from 312,705.6 to 186, 760.3 mg kg−1 after 15 days of treatment. After this time, hydrocarbon degrading activity stopped, corresponding with a decrease in hydrocarbon degrading bacteria. These changes were related to a reduction in pH that inhibits biodegradation. During the assay, sulphur compounds were gradually oxidized and transformed. The concentration of sulphate increased from 5,096 to 64,868.3 mg kg−1 after 30 days in the assay, although controls were unchanged. Therefore, it is important to determine changes to the main compounds of the waste in order to assess their impact.