At high altitudes, the low air pressure, low atmospheric oxygen content, and cryogenic environment during the cold season greatly limit the treatment efficiency of wastewater treatment plants (WWTPs). A novel pilot-plant configuration of the multi-stage baffled A2O wastewater treatment process was proposed and tested in Xizang. Different operational conditions involving at different influent loads and at low temperatures (10.0–11.0°C) were tested. When the influent flowrate increased to 4 m3∙d−1, the hydraulic retention time (HRT), internal and external reflux ratio, dissolved oxygen (DO), and aeration demands (gas to water ratio) all decreased to 34.2 h, 3.5/7, a stable 2.0–2.5 mg∙L−1, and 17.5, respectively. The effluent chemical oxygen demand (COD), total nitrogen (TN), ammonia nitrogen (NH+4−N), and total phosphorus (TP) all met the requirements of Class 1 Grade A of the China National Municipal Wastewater Discharge Standards (GB 18918-2002). The contribution of denitrifying phosphorus removal (DPR) to the removal of both nitrogen and phosphorus was over 50%. The alpha diversity and abundance of the top genera in the microbial community structure were both higher than the plateau WWTP. The reaction activity of the DPR process was significantly enhanced via the increased abundance of key functional genes within the metabolism pathway of ammonia-oxidizing bacteria (AOB) and nitrogen-oxidizing bacteria (NOB). The special multi-stage baffled structure featured a strategy of high sludge storage that improved the system tolerance for low temperatures and ensured favorable and stable performance for nitrogen and phosphorus removal at low temperatures. A short, periodic, and cyclically intermittent operation mode, with each cycle lasting only 20 minutes, effectively inhibited filamentous bacteria sludge bulking, resulting in a sludge volume index (SVI) that decreased to within 120 mL∙g−1 during the first 15 days of system start-up. A long sludge retention time (SRT) with no sludge discharging over 169 days and reduced aeration demands contributed to lower operation costs. The investigation revealed that the system had a high capacity for storing sludge phosphorus, possessing a TP content within a range of 23.45–28.99 mg∙g−1. This study provides a feasible solution for efficiently and economically treating wastewater in high-altitude areas.