The main challenge in removing nutrients from municipal wastewater in China is the lack of available carbon sources. While hydrolysis acidification tanks can improve wastewater biodegradability by effectively utilizing internal carbon sources, high sludge concentrations are difficult to control in traditional tank variants. In this study, an innovative anaerobic filter (AnF) hydrolysis acidification reactor composed of a continuously stirred tank reactor (CSTR) and cloth media filter was designed to regulate and maintain high sludge concentrations in the hydrolysis acidifier. The reactor was used as a pretreatment unit for the anaerobic/anoxic/oxic (AAO) units and combined into an AnF-AAO system to explore the effectiveness of internal carbon source utilization in wastewater. The results indicate that as the sludge concentration in the hydrolysis acidifier increased, the hydrolysis and acidification processes became more efficient. The optimal sludge concentration was 40 g/L, which significantly increased the production of soluble chemical oxygen demand and volatile fatty acids. Above this concentration, the efficiency decreased. Compared to traditional AAO processes, the AnF-AAO system achieved superior total nitrogen and phosphorus removal with shorter hydraulic retention times and reduced sludge production by a significant amount of 35%. Due to its capacity for enhancing internal carbon source utilization, the AnF-AAO system constitutes a promising approach for sustainable urban wastewater treatment.