Decentralized wastewater treatment, often limited by conventional centralized approaches, has the potential to enhance environmental sustainability and mitigate water-related health risks by reducing the discharge of untreated wastewater at its source. Hydroponic systems, leveraging plant–microbe interactions, have emerged as viable nature-based decentralized alternatives for wastewater remediation, achieving substantial reductions in organic load (up to 85% BOD, 77.5% COD), inorganic metal ions (>60% Pb and Cd), and nutrient levels (e.g., 90% NH4+, 86% PO43−). However, large-scale implementation remains limited because of substrate-related issues like salt formation, clogging and low adsorption capacity. Integrating biochar into hydroponic systems addresses these challenges by providing adsorption sites, microbial habitats, nutrient retention capacity, and long-term carbon sequestration benefits. This review critically examines the mechanistic, performance, sustainability, and food-safety dimensions of hydroponic–biochar integrated systems. A unified mechanistic framework is presented, encompassing adsorption–biodegradation coupling, spatially coupled nitrification–denitrification within biochar pore networks, and synergistic plant–biochar–microbe interactions governing the removal of nutrients, heavy metals, and organic micropollutants. Reported studies demonstrate improved treatment efficiencies with up to 95% NH4+ and PO43− removal, >90% heavy metal sequestration, 76% NO3− reduction, and approximately 45% higher plant biomass production. Life cycle assessment (LCA) and techno-economic analysis (TEA) outcomes are highly context-dependent, varying with reactor configuration, functional unit, biochar feedstock, and electricity source, although optimized within-study scenarios reported up to 85% GWP reduction and ∼4% lower substrate-related environmental impacts. Hydroponic–biochar integration thus presents a scalable, carbon-negative, resource-efficient platform for sustainable effluent management, water reuse, and nutrient recovery, contributing directly to water-related sustainable development goals.