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The principal polyphosphate-accumulating organism (PAO) in a biologicalphosphate-removal activated-sludge process was assessed microscopically. The organism was recognized by its distinct morphotype most easily after polyphosphate staining. The PAO occurred in large, homogeneous clusters. The cells of the PAO were the biggest cells abounding in the sludge -clearly bigger than average sludge bacteria. Typical of the principal PAO was a variation of cell size, even in fresh sludge. In acetate minimal medium containing ampicillin, the original principal PAO clusters were converted to clusters of clearly larger, polyphosphate-containing, vegetative yeast-like cells. Cycloheximide addition inhibited this and caused flock disintegration, disappearance of the principal PAO clusters and growth of free bacteria. The cell wall of the principal PAO was not of the usual bacterial character. It showed anomalous Gram staining, stained for chitin (not found in bacteria) and bound concanavalin A, like cell walls of many yeasts. In addition, the PAO cell wall was resistant to lysozyme, but sensitive to an enzyme mixture that lyses yeast cell walls. It was concluded that the principal PAO cells in the studied sludge were clustered spores of a yeast.