Thermal hydrolysis pretreatment (THP) has been considered as an advanced approach to enhance the performance of anaerobic digestion treating municipal sludge. However, several drawbacks were also identified with THP including the formation of brown and ultraviolet-quenching compounds that contain recalcitrant dissolved organic nitrogen (rDON). Melanoidins produced from the Maillard reaction between reducing sugar and amino group have been regarded as a representative of such compounds. This review presented the state-of-the-art understanding of the mechanism of melanoidin formation derived from the research of sludge THP, food processing, and model Maillard reaction systems. Special attentions were paid to factors affecting melanoidin formation and their implications to the control of rDON in the sludge THP process. These factors include reactant availability, heating temperature and time, pH, and the presence of metallic ions. It was concluded that efforts need to be focused on elucidating the extent of the Maillard reaction in sludge THP. This paper aims to provide a mechanistic recommendation on the research and control of the THP-resulted rDON in municipal wastewater treatment plants.