A novel continuous-flow bioreactor with aerobic granular sludge and self-forming dynamic membrane (CGSFDMBR) was developed for efficient wastewater treatment. Under continuous-flow operation, aerobic granular sludge was successfully cultivated and characterized with small particle size of about 0.1-1.0 mm, low settling velocity of about 15-25 m/h, loose structure and high water content of about 96-98%. To maintain the stability of aerobic granular sludge, strategies based on the differences of settling velocity and particle-size between granular and flocculent sludge were implemented. Moreover, in CGSFDMBR, membrane fouling was greatly relieved. Dynamic membrane was just cleaned once in more than 45 days' operation. CGSFDMBR presented good performance in treating septic tank wastewater, obtaining average COD, NH4+-N, TN and TP removal rates of 83.3%, 73.3%, 67.3% and 60%, respectively, which was more efficient than conventional bioreactors since that carbon, nitrogen and phosphorus were simultaneously removed in a single aerobic reactor. (C) 2012 Elsevier Ltd. All rights reserved.