This study investigated the effects of hydrothermal liquefaction (HTL) on the fate of bioactive compounds (BACs) often present with wet biosolids from wastewater, manure, or algae. Tracking radiolabeled 14C for two BACs showed that 60–79% of the carbon was transferred to the HTL raw oil product, and most of the rest was found in the aqueous product. In the presence of both swine manure and Spirulina biomass feedstocks, HTL provided essentially complete removal of three BACs when operated at 300°C for ⩾30min. Experiments with both natural transformation and high-efficiency transformation showed that HTL provided complete deactivation of antibiotic resistant genes for all tested HTL conditions (250–300°C, 15–60min reaction time). Thus, incorporating HTL into wastewater treatment systems can simultaneously produce valuable bio-crude oil, provide effective removal of BACs and disrupt the natural pathways for antibiotic resistant gene transfer from manure and wastewater biosolids to the environment.