This laboratory study presents a detailed evaluation of the effects of dissolved oxygen concentration and accumulation of storage polymers on sludge settleability in activated sludge systems with an aerobic selector. The oxygen and substrate availability regime were simulated in laboratory sequencing batch reactor systems. The experiments showed that low dissolved oxygen concentration (less than or equal to1.1 mg O-2 l(-1)) had a strong negative effect on sludge settleability, leading to the proliferation of filamentous bacteria (Thiothrix spp., Type 021N and Type 1851). This negative effect was stronger at high chemical oxygen demand loading rate. This indicates that a compartmentalised (plug flow) aerobic contact tank, designed at short hydraulic residence time to guarantee a strong substrate gradient, with low dissolved oxygen concentration, might be worse for sludge settleability than an 'overdesigned' completely mixed contact tank. Contrary to the general hypothesis, the maximum specific acetate uptake rate, poly-beta-hydroxybutyrate production rate, and resistance to short starvation periods are similar in both poor- and well-settling sludge. The results of this study support our previous hypothesis on the importance of substrate gradients for the development of filamentous structures in biological flocs, from soluble organic substrate gradients to dissolved oxygen gradients in sludge flocs.