Pharmaceutical compounds in wastewater have emerged as a significant concern for the aquatic environment. The use of in vitro bioassays represents a sustainable and cost-effective approach for assessing the potential toxicological risks of these biologically active compounds in wastewater and aligns with ethical considerations in research. It facilitates high-throughput analysis, captures mixture effects, integrates impacts of both known and unknown chemicals, and reduces reliance on animal testing. The core aim of the current review was to explore the practical application of in vitro bioassays in evaluating the environmental impacts of pharmaceuticals in wastewater. This comprehensive review strives to achieve several key objectives. First, it provides a summary categorisation of pharmaceuticals based on their mode of action, providing a structured framework for understanding their ecological significance. Second, a chronological analysis of pharmaceutical research aims to document their prevalence and trends over time, shedding light on evolving environmental challenges. Third, the review critically analyses existing bioassay applications in wastewater, while also examining bioassay coverage of representative compounds within major pharmaceutical classes. Finally, it explores the potential for developing innovative bioassays tailored for water quality monitoring of pharmaceuticals, paving the way for more robust environmental monitoring and risk assessment. Overall, adopting effect-based methods for pharmaceutical monitoring in water holds significant promise. It encompasses a broad spectrum of biological impacts, promotes standardized protocols, and supports a bioassay test battery approach indicative of different endpoints, thereby enhancing the effectiveness of environmental risk assessment.