AbstractBACKGROUNDMicroalgal–bacterial systems work on the principle of the symbiotic relationship between algae and bacteria. The ability of algal–bacterial photobioreactors for the treatment of wastewater containing ammonia and phenol has been poorly addressed. In this work a self‐sustaining synergetic microalgal–bacterial granular sludge process was thus developed to treatment of industrial wastewater based upon the low cost of photosynthetic oxygenation and the simultaneous phenol and nitrogen removal. The performance of a conventional sequential batch reactor (SBR) based on aerobic bacterial communities (SBRB) and a microalgal–bacterial granular SBR (SBRMB) were comparatively assessed. The major challenges associated with microalgal–bacterial systems were discussed.RESULTSA complete removal of phenol (100 mg L−1) was achieved in both reactors. The reactors SBRB and SBRMB showed similar performance in term of removal of inorganic nitrogen. Nitrogen mass balances estimated nitrogen assimilation, nitrification and denitrification. Higher simultaneous nitrification and denitrification (70% SND) occurred in SBRB as determined by mass balances. The higher nitrogen assimilation (17.9%) by the microalgal–bacterial biomass compensated the lower denitrifying activity in SBRMB (54% SND), resulting in a removal of inorganic nitrogen (61%) similar to that obtained in SBRB (66%). N2O was not detected in the headspace of any system.CONCLUSIONGranular microalgal–bacterial consortia implemented in SBR constitute an efficient method for industrial wastewater treatment achieving complete removal of ammonia and phenol. The application of SBRMB would be more cost effective than SBRB mainly due to the significant energy savings in SBRMB resulting in a sustainable system that contributes to the circular bioeconomy. © 2023 The Authors. Journal of Chemical Technology and Biotechnology published by John Wiley & Sons Ltd on behalf of Society of Chemical Industry (SCI).