This study aimed to profile the dynamics of indigenous bacterial communities in activated sludge, assess the pollutant load, and unlock the functional genes involved during the activated sludge treatment process. The physicochemical analyses of activated sludge revealed high amounts of phosphate, sulfate, chloride, and lignin, along with heavy metals like Fe, Zn, Cu, Ni, and Pb. Simultaneously, the GC-MS/MS technique identified decane, 1 bromo-2-methyl, pentadecanoic acid, methyl ester, benzene dicarboxylic acid, stigmasterol, borinic acid, diethyl, 2-hydroxymethyl cyclopropane, 2-methoxy-4-ethyl-phenol, 3,4,5-trichlorophenol, octadecanoic acid, and tetracosanic acid as major compounds. Furthermore, taxonomic classification of operational taxonomic unit (OTU) data revealed that Proteobacteria was the most abundant phylum, comprising 44.54% of the microbial community. In addition, other phyla, such as Bacteriodetes, Acidobacteria, Planctomycetes, Chlorolfexi, Actinobacteria, and Verrucomicrobia were also recorded within a range between 13.27 and 4.1% in the sludge. At the genus and species levels, the dominant organisms were unclassified (3.62%) and belonged to the family Rhodospirillacea. Further, PICRUSt2-based KEGG Orthology (KO) analysis showed enriched energy metabolism as the most abundant category, driven by oxidative phosphorylation and the TCA cycle. Furthermore, the MetaCyc analysis revealed a robust and adaptable microbial community with the dominant pathways of aerobic respiration I (cytochrome c) and fatty acid biosynthesis pathways, such as cis-vaccenate biosynthesis. The EC assignments highlighted a broad range of enzymatic functions, with a strong emphasis on oxidoreductases and transferases involved in energy production and biosynthesis. This research offers valuable insights into microbial community dynamics in wastewater treatment processes and identifies their functional role in a chlorolignin waste-polluted environment.