A laboratory-scale sequencing batch reactor was started-up with flocculated biomass and operated primarily for enhanced biological phosphate removal. Ten weeks after the start-up, gradual formation of granular sludge was observed. The compact biomass structure allowed halving the settling time, the initial reactor volume, and doubling the influent COD concentration. Continued operation confirmed the possibility of maintaining a stable granular biomass with a sludge volume index less than 40 ml g(-1), while securing a removal efficiency of 95% for carbon, 99.6% for phosphate, and 71% for nitrogen. Microscopic observations revealed a morphological diversity.