A novel membrane bioreactor system, a membrane bioreactor with aerobic granular sludge (MGSBR), was developed to treat municipal wastewater in this paper. The main goal was to control the membrane fouling by changing the configuration of aerobic sludge, also to examine the feasibility of the MGSBR used to treat wastewater. The results in the paper demonstrated that treatment performance of a MGSBR was stable and on a high level. The ranges of COD degradation and concentration in the effluent front a MGSBR were 80-95% and 15-50 mg L-1, respectively, during the period of operation examined. Compared with the conventional MBR (MFSBR) system, anaerobic environment in a MGSBR system could be effectively provided inside aerobic granules, which benefited for the denitrification of nitrate nitrogen. The NH4-N concentration in effluent from the MGSBR system was all the time lower than 15 mg L-1. During the examined time, the membrane permeability of MGSBR was more 50% higher than that of a MFSBR. The substitute of floe sludge by aerobic granules in the MBR system benefited for controlling flux decline and membrane fouling with good performance of treatment. The supernatant (colloids + solutes) was almost the controller of the membrane flux in a MGSBR. The cleaning recovery of hydraulic cleaning in membrane flux from the MGSBR was 87.7%, which was near 10% lower than that of MFSBR system. However, the chemical cleaning could remove most of foulants on the membrane surface and within the pores with the recovery of near 100%. As a novel MBR system possessing advantages in controlling of membrane fouling with good performance of wastewater treatment, the MGSBR process deserved more attention and deep investigation in the future. (C) 2005 Elsevier B.V. All rights reserved.