Fenton reactions are widely applied for degrading recalcitrant pollutants, but the resulting ferric sludge remains a challenge. A novel concept for regenerating Fe(II) solution at pH 6 from ferric sludge generated in neutral Fenton is proposed. A microbial fuel cell (MFC) with biocathode and addition of citric acid was used for the first time to regenerate Fe(II) from ferric sludge. The concentration of dissolved Fe(II) reached 120 mg/L in the biocathode, which was much higher than that obtained in abiotic cathode (<1 mg/L). The chemical cost of regenerating Fe(II) was only 3.3% of the commercial Fe(II). Subsequently, the regenerated Fe(II) solution was used for Fenton treatment to remove pharmaceuticals from the municipal wastewater effluent. A wide range of pharmaceuticals was successfully removed at neutral pH in 60 min, and the efficiency of the treatment was similar to when the same dosage of commercial Fe(II) was applied.