The simultaneous phosphorus (P) removal and sludge reduction by extending the sludge retention time (SRT) in the continuous-flow reactor (CFR) with enhanced biological phosphorus removal (EBPR) granules were investigated in this study. While the system operated without sludge discharge for 60 days, the COD and P removal efficiencies and settling ability of granules deteriorated obviously. Meanwhile, the protein content increased and the sludge production reduced gradually during this period due to the decrease of PAOs activities. Then, some sludge was discharged every day during the day 61–180, and the performance of CFR and the settling ability of granules recovered gradually to an excellent level. The sludge production and sludge yield were 1.34 g day−1 and 0.11 gMLSS gCOD−1 during the recovery and stable operation period, respectively. Although about 60% sludge reduction was obtained, excellent P removal was demonstrated simultaneously. Hence, sludge minimization and excellent P removal were successfully coupled by extending SRT in CFR with EBPR granules. The results of Illumina MiSeq sequencing showed that the fermentative bacterium increased after extending the SRT, which played a key role in sludge reduction.