The escalating releasing of degradable microplastics (DMPs) into wastewater may pose a potential threat to biological nitrogen removal. However, whether and how different DMPs affect nitrogen transformations in aerobic granular sludge (AGS) systems remains unclear. This work therefore aimed to fill such knowledge gaps by employing poly (ε-caprolactone) (PCL) and polybutylene succinate (PBS) as the model microplastics. Results revealed that exposure to 0.5 and 5 mg/L DMPs did not remarkably affect the nitrogen removal. However, increasing DMPs concentration to 50 mg/L suppressed the nitrogen transformation, causing a significant degree of inhibition in total nitrogen removal efficiency, particularly in the PCL-exposure group (decreased by 2.0%–25.7%). The pronounced inhibitory effects were attributed to the more readily biodegradability of PCL compared to PBS, resulting in an enhanced release of microplastics that induced excessive production of reactive oxygen species and destruction of cytomembrane integrity. Consequently, the relative abundance of denitrifiers was decreased, leading to suppressed expression of the genes (e.g. narG) involved in nitrogen transformation. This was accompanied by a decline in enzyme activity (e.g. nitrate reductase) and electron transport system activity. The correlations among genes, microbes and environmental factors were reshaped by different DMPs, underlying the intrinsic mechanism for the deteriorated nitrogen removal. Overall, this study implies that compared to PBS microplastics, the accumulation of PCL microplastics in aquatic environments poses a more significant threat to biological treatment efficacy and global nitrogen cycling, thereby warranting increased attention.