The invention relates to a domestic waste pyrolysis and composting treatment system and method. The method comprises the following steps: sorting domestic waste to obtain inorganic matter, combustible matter and organic matter; performing pyrolysis treatment on the combustible matter to produce solid charcoal, a pyrolysis oil-gas mixture and hot flue gas which has a temperature of 120-150 DEG C and is used for providing energy for aerobic composting; performing separation and purification treatment on the pyrolysis oil-gas mixture to obtain pyrolysis oil and purified pyrolysis gas; under the conditions that the temperature is 25-65 DEG C and the time is 7-15 days, performing aerobic composting on the organic matter to obtain a fertilizer product and simultaneously produce smelly gas for supporting combustion of air during the pyrolysis treatment; and feeding the solid charcoal, the pyrolysis oil and the purified pyrolysis gas into a combustion device, performing combustion, producing vapor through heat exchange, and using the vapor for power generation. The whole process is low in cost, produces no dangerous waste fly ash, achieves favorable environmental benefits, solves the waste and stinky gas treatment problems, and can easily implement industrial and large-scale production.