Pyrolysis is potentially an effective treatment of oily sludge for oil recovery, and the addition of a catalyst is expected to affect its pyrolysis behavior. In the present study, Fe/Al-pillared bentonite with various Fe/Al ratios as pyrolysis catalyst is prepared and characterized by XRD, N-2 adsorption, and NH3-TPD. The integration of Al and Fe in the bentonite interlayers to form pillared clay is evidenced by increase in the basal spacing. As a result, a critical ratio of Fe/Al exists in the Fe/Al-pillared bentonite catalytic pyrolysis for oil recovery from the sludge. The oil yield increases with respect to increase in Fe/Al ratio of catalysts, then decreases with further increasing of Fe/Al ratio. The optimum oil yield using 2.0 wt% of Fe/Al 0.5-pillared bentonite as catalyst attains to 52.46% compared to 29.23% without catalyst addition in the present study. In addition, the addition of Fe/Al-pillared bentonite catalyst also improves the quality of pyrolysis-produced oil and promotes the formation of CH4. Fe/Al-pillared bentonite provides acid center in the inner surface, which is beneficial to the cracking reaction of oil molecules in pyrolysis process. The present work implies that Fe/Al-pillared bentonite as addictive holds great potential in industrial pyrolysis of oily sludge.