Paracetamol (4'-hydroxyacetanilide, N-acetyl-p-aminophenol, acetaminophen, and paracetamol) is a widely used over-the-counter analgesic and antipyretic drug. Paracetamol and structural analogs are ubiquitous in the natural environment and easily accumulate in aquatic environment, which have been detected in surface waters, wastewater, and drinking water throughout the world. Paracetamol wastewater is mainly treated by chemical oxidation processes. Although these chemical methods may be available for treating these pollutants, the harsh reaction conditions, the generation of secondary pollutants, and the high operational cost associated with these methods have often made them not a desirable choice. Biodegradation of paracetamol is being considered as an environmentally friendly and low-cost option. The goal of this review is to provide an outline of the current knowledge of biodegradation of paracetamol in the occurrence, degrading bacteria, and proposed metabolic/biodegrading pathways, enzymes and possible intermediates. The comprehensive understanding of the metabolic pathways and enzyme systems involved in the utilization of paracetamol means will be helpful for optimizing and allowing rational design of biodegradation systems for paracetamol-contaminated wastewater.