To achieve a closed nutrient cycle and more sustainable food production, enhanced nutrient recycling in the agri-food system is a necessity. Pyrolysis is an emerging technology to recycle the nutrient content of sewage sludge. The produced biochar can be used to reduce the need for mineral fertilizers; in addition, pyrolysis can also handle potential pollutants such as microplastics and pathogens present in sewage sludge. In this research, a life cycle assessment (LCA) was carried out to determine the environmental impact of sewage sludge pyrolysis as an alternative to current practices of two different cases of sewage sludge treatment in two municipalities in Sweden. The results indicated that avoiding mineral fertilizer production by using biochar has a significant influence on the environmental benefits. Furthermore, it showed that an integrated system of anaerobic digestion followed by pyrolysis could perform as the most environmental-friendly option for sewage sludge treatment with a lower risk of transferring pollution to the soil.