Pyrolytic char is widely used for tar removal due to its cost-effective and eco-friendly. In this work, the waste municipal sludge is selected to produce the composite catalyst with transition metal Fe/Ni, and the as-synthesized catalyst was used in the catalytic cracking of the tar model compound toluene by a laboratory-scale plant. The toluene conversion and the molar ratios of CO, H-2, CO2, CH4 and C2H4 in the generated gas were investigated. Results show that municipal sludge char-based catalysts are more likely to produce H-2-rich syngas (the molar ratio of syngas 75%), and the molar ratio of H-2 can reach 73.3% under optimal conditions. The FeNi bimetallic catalyst combines the advantages of different metal elements to make the catalyst performance more stable. Meanwhile, the effects of residence time (tau) and steam-to-carbon ratio (S/C) on the conversion rate were studied. As a result, the excessive residence time or steam-to-carbon ratio will have no more positive effect on the performance of the catalyst. Ultimately, the catalyst life test of 8 h was carried out, the results showed that cost-effective and green waste municipal sludge char-supported Fe/Ni catalysts in this work could be used for removal of the tar heavy component toluene.