The carbon and nitrogen removal process using PVA-gel (Polyvinyl Alcohol) immobilized microorganisms was studied. The process has been operated under diverse process conditions for 12 months. The process consists of denitrification with internal recycle of 300%, nitrification, aerobic digestion reactors and settling tank. Nitrification and nitrogen removal efficiency according to gel packing ratio, temperature were studied. Yield for heterotrophs (YH), decay coefficient for heterotrophs (bH) in aerobic digestion reactor were determined to characterize the sludge reduction mechanism and compared with typical data of activated sludge process. Then SRT in aerobic digestion reactor was determined on an experimental basis and sludge reduction efficiency was calculated. The process was implemented successfully with sludge reduction efficiency of 92.0~98.5% on a basis of biomass.