Anaerobic co-digestion is an attractive option to treat food waste and waste activated sludge, which is increasingly applied in real-world situations. As an active component in Capsicum species being substantially present in food waste in many areas, capsaicin has been recently demonstrated to inhibit the anaerobic co-digestion. However, the interaction between capsaicin and anaerobic co-digestion are still poorly understood. This work therefore aims to deeply understand the fate and impact of capsaicin in the anaerobic co-digestion. Experiment results showed that capsaicin was completely degraded in anaerobic co-digestion by hydroxylation, O-demethylation, dehydrogenation and doubly oxidization, respectively. Although methane was proven to be produced from capsaicin degradation, the increase in capsaicin concentration resulted in decrease in methane yield from the anaerobic co-digestion. With an increase of capsaicin from 2 ± 0.7 to 68 ± 4 mg/g volatile solids (VS), the maximal methane yield decreased from 274.6 ± 9.7 to 188.9 ± 8.4 mL/g VS. The mechanic investigations demonstrated that the presence of capsaicin induced apoptosis, probably by either altering key kinases or decreasing the intracellular NAD+/NADH ratio, which led to significant inhibitions to hydrolysis, acidogenesis, and methanogenesis, especially acetotrophic methanogenesis. Illumina Miseq sequencing analysis exhibited that capsaicin promoted the populations of complex organic degradation microbes such as Escherichia-Shigella and Fonticella but decreased the numbers of anaerobes relevant to hydrolysis, acidogenesis, and methanogenesis such as Bacteroide and Methanobacterium.