Aerobic granules were adopted to degrade high-strength phenol wastewater in batch experiments. The acclimated granules effectively degraded phenol at a concentration of up to 5,000 mg l(-1) without severe inhibitory effects. The biodegradation of phenol by activated sludge was inhibited at phenol concentrations >3,000 mg l(-1). The granules were composed of cells embedded in a compact extracellular matrix. After acid or alkaline pretreatment, the granules continued to degrade phenol at an acceptable rate. The polymerase chain reaction-denaturing gradient gel electrophoresis technique was employed to monitor the microbial communities of the activated sludge and the aerobic granules following their being used to treat high concentrations of phenol in batch tests.