The invention provides a system and a method for treating oil-containing sludge, according to a treating process for oil-containing sludge, the system comprises a air flotation thickening device, a thermal extraction device, a cyclone separator device, a dust removal device and a condensing fractionation device in order, wherein the air flotation thickening device is used for performing air flotation thickening on the oil-containing sludge to generate sludge materials and waste water; the thermal extraction device is used for thermally extracting the sludge materials; the cyclone separator device is used for separating the products by thermal extraction to a mixed gas and a solid dry substance; the dust removal device is used for removing the dust of the mixed gas; the condensing fractionation device is used for carrying out condensing fractionation on the gas which is passed through the dust removal device. The invention also provides a method for treating oil-containing sludge. The system and method of the invention combine the advantages of condensing fractionation and thermal extraction, and are capable of thoroughly and cleanly treating the oil-containing sludge in oil refinery, eliminating harm of the oil-containing sludge on environment, and recovering the precious resources. The invention has the advantages of high efficiency, economy and environmental protection.