Hydrolysis is considered to be the rate-limiting step in anaerobic digestion of waste activated sludge (WAS). In this study, an innovative 4 stages cascade anaerobic digestion system was researched to (1) comprehensively clarify whether cascading configuration enhances WAS hydrolysis, and to (2) better understand the governing hydrolysis kinetics in this system. The cascade system consisted of three 2.2 L ultra-short solids retention times (SRT) continuous stirred tank reactors (CSTRs) and one 15.4 L CSTR. The cascade system was compared with a reference conventional CSTR digester (22 L) in terms of process performance, hydrolytic enzyme activities and microbial community dynamics under mesophilic conditions (35 °C). The results showed that the cascade system achieved a high and stable total chemical oxygen demand (tCOD) reduction efficiency of 40–42%, even at 12 days total SRT that corresponded to only 1.2 days SRT each in the first three reactors of the cascade. The reference-CSTR converted only 31% tCOD into biogas and suffered process deterioration at the applied low SRTs. Calculated specific hydrolysis rates in the first reactors of the cascade system were significantly higher compared to the reference-CSTR, especially at the lowest applied SRTs. The activities of several hydrolytic enzymes produced in the different stages revealed that protease, cellulase, amino peptidases, and most of the tested glycosyl-hydrolases had significantly higher activities in the first three small digesters of the cascade system, compared to the reference-CSTR. This increase in hydrolytic enzyme production by far exceeded the increase in specific hydrolysis rate, indicating that hydrolysis was limited by solids-surface availability for enzymatic attack. Correspondingly, high relative abundances of hydrolytic-fermentative bacteria and hydrogenotrophic methanogens as well as the presence of syntrophic bacteria were found in the first three digesters of the cascade system. However, in the fourth reactor, acetoclastic methanogens dominated, similarly as in the reference-CSTR. Overall, the results concluded that using multiple CSTRs that are operated at low SRTs in a cascade mode of operation significantly improved the enzymatic hydrolysis rate and extend in anaerobic WAS digestion. Moreover, the governing hydrolysis kinetics in the cascading reactors were far more complex than the generally assumed simplified first-order kinetics.