Municipal solid waste (MSW) management is a major concern for Bangladesh, given its high population density and increasing waste production rate. Conventional waste management methods, such as landfilling, result in high carbon emissions for the environment. With over 70% of MSW being organic, hydrothermal carbonization (HTC) has emerged as a promising technology for recovering energy and nutrients from such heterogeneous waste streams. This study aimed to compare the environmental effects of HTC coupled with electricity generation (HTC-EG) from MSW with traditional landfilling using life cycle assessment in the context of Bangladesh. The HTC-EG scenario showed lower environmental impacts in three out of five impact categories, specifically reducing climate change, freshwater ecotoxicity, and photochemical ozone formation. For a functional unit of 6000-ton MSW, HTC-EG reduces the climate change impact by 7.7 × 106 kg CO2 eq. Additionally, HTC-EG has 46.77% less impact on freshwater ecotoxicity compared to landfilling and reduces the photochemical ozone formation impact by 1.86 × 104 NMVOC eq. However, the HTC-EG scenario leads to increased particulate matter formation and marine water eutrophication due to SO2, SO3, and PM2.5 emissions during hydrochar combustion and nitrate release from the liquid stream of the HTC reactor, respectively. Addressing these challenges through appropriate post-processing of flue gas from hydrochar combustion and HTC liquid streams could make HTC-EG a viable alternative to landfilling for MSW management in Bangladesh.