This study examined the impact of thermal hydrolysis process (THP) pre-treatment on anaerobic co-digestion of wastewater sludge and household waste and assessed whether THP was vital to achieve higher process capacity. Performance data were collected for both industrial- and laboratory-scale digesters and response in microbial community structure was evaluated by Illumina sequencing. Implementation of THP at the industrial-scale plant increased methane yield by 15% and enhanced substrate degradability. Possibility to extend the sludge retention time due to a higher solid content of the substrate, sanitisation of the digestate and improved fertiliser quality of the digestate were other industrial-scale benefits of THP installation. Continuously-fed laboratory-scale digesters were fed THP-treated or untreated substrate at an organic loading rate (OLR) of 5 g volatile solid (VS)/L/day, a feeding rate necessary at the corresponding industrial-scale plant to meet the estimated population increase within the municipality. The results indicated that the plant could have increased the capacity with unimpaired stability independently of THP installation, even though the retention time was significantly shortened during operation with untreated substrate. Microbial community analyses revealed increased contribution of the Clostridia class after THP installation in industrial-scale digesters and positive correlation between Firmicutes:Bacteriodetes and methane yield in all digesters. Differentiated profiles in laboratory-scale digesters indicated that a temperature increase from 37 to 42 °C in association with THP installation and altered substrate composition were strong determining factors shaping the microbial community. Overall, these findings can assist industrial-scale plants in choosing management strategies aimed at improving the efficiency of anaerobic digestion processes.