Understanding salt effects on activated sludge systems and treatment performance is essential in order to design and operate a full scale treatment plant processing saline sewage. For this purpose, a bench scale modified University of Cape Town (MUCT) process for treating saline sewage was used to provide information with regard to microbial population shift and treatment performance. Various salt levels (5, 8, 10 and 15 g/L) were studied. Experimental results indicated that the salt concentration in sewage significantly affected phosphorous removal, while salt inhibition of ammonium degradation was slight, even in a 15 g/L salt solution. Outstanding nitrite accumulation in aerobic tanks occurred in the MUCT treating 8 g/L saline sewage, which resulted in denitrifying nitrite by phosphorous accumulating organisms (PAOs) in the anoxic tank. Population size of physiological groups (aerobic-heterotrophic, nitrifying and denitrifying microbial group) was also investigated at different salt levels. The investigation of changes in the dynamics of the activated sludge microbial structure gave an insight into the nature and the magnitude of salt effects on the microbial community.