Algal-bacterial granules have been drawing attention in wastewater treatment due to their rapid settling ability and efficient nutrient removal performance. This study evaluated the impact of air flow rates on nitrogen removal and the formation of algal-bacterial granules in domestic wastewater treatment. The highest nitrogen removal efficiency was achieved by operating with two separate feedings and the addition of an external carbon source. The higher air flow rate resulted in a higher nitrification rate and produced smaller and more compact granules on average. However, increasing the air flow rate did not necessarily increase extracellular polymeric substances (EPS) production. Computational Fluid Dynamics (CFD) simulations revealed that mechanical mixing was the primary source of shear force. Increasing the air flow rate from 0.2 LPM to 0.5 LPM only yielded a 12% increment in the volume-averaged strain rate. Further analysis of microbial communities showed that changes in bioreactor operation, especially sodium acetate addition and aerations, shifted the microbial community composition. The sodium acetate addition led to the increase of microbial diversity and the relative abundance of denitrifiers such as Thauera, while the aeration caused the increasing relative abundances of nitrogen-related genera (such as Nitrospira) and the decreasing relative abundances of cyanobacteria and Chlorella in the long-term operation of the photobioreactors. Moreover, the decrease in total abundance of grazers and pathogens along with the operation, including Chytridiomycetes, Sessilida, and Operculariidae, might result from the shear force and the decrease of prokaryotic species, such as Chlorella spp..