Degradation of Aroclor 1242 was studied in granular biofilm reactors with limited aeration. An aerobic biphenyl degrader, Rhodococcus sp. M5, was used to supplement a natural bacterial population present in a “bioaugmented” reactor, while the “non-bioaugmented” reactor only contained natural granular sludge. The bioaugmentation, however appeared to have no effect on the reactor performance. Aroclor measurements showed its disappearance in both reactors with only 16–19% of Aroclor recovered from the reactor biomass and effluent. Simultaneously, a chlorine balance indicated that dechlorination occurred at a specific rate of 1.43 mg PCB (g volatile suspended solids) −1 d −1, which was comparable to the observed rate of Aroclor disappearance. Intermediates detected in both reactors were biphenyl, benzoic acid, and mono-hydroxybiphenyls. This suggests that a near-complete mineralization of Aroclor can be achieved in a single-stage anaerobic/aerobic system due to a combination of reductive and oxidative degradation mechanisms.