This study aimed to investigate the feasible operating conditions for the formation of aerobic granular biomass (AGB) in a continuous flow‐intermittent decant (CFID) type reactor. During the start‐up phase, that is, the operational period – I, the reactor was fed with sewage, and aerobic granules began to grow after 20 days of reactor start‐up. In period – II, experiments were conducted with 50% sewage and 50% anaerobic effluent (i.e., UASB‐treated effluent) as substrates, and subsequently, upon successful formation of mature granules, anaerobic effluent was added throughout operational periods III and IV. Results inferred that the highest removal of COD, NH4+N, TN, and PO43−P was observed in the study periods III and IV, with removal rates of 75.2 ± 10.97%, 79.24 ± 14.81%, 67.66 ± 7.17%, and 47.12 ± 14.69%, respectively. The particle size analysis shows the size of the granules was significantly increased in period IV of the study compared to previous study phases. The scanning electron microscopy (SEM) images referred that rod‐shaped bacteria were abundant after period I, while enriched microbial species of coccus, bacillus, and filamentous fungus were observed at the end of the study. These findings suggest that CFID‐type reactor can effectively cultivate AGB and remove organics and nutrients from anaerobic effluent.