Anaerobic/anoxic denitrifying reactors, such as an upflow sludge blanket (USB) reactor, can retain high concentration of biomass inside of the reactor as granular sludge, which allows high nitrogen removal performance from wastewaters. However, granular sludge is critical to high nitrogen removal performance. In this study, simple granulation method was developed in a denitrifying USB reactor fed with municipal sewage and 50 mg-N⋅L−1 of sodium nitrate as an easily available nitrate source, and granular formation, nitrogen removal performance, and microbial community structure were investigated. A 11.4-L USB reactor was operated at an upflow velocity of 50 cm⋅h−1, and hydraulic retention time of 2.9 h under ambient temperature. Granular sludge with up to 3.8 mm of diameter was formed within 15 days, and the nitrate removal rate increased 9.8 mg-N⋅gMLVSS−1 ⋅h−1to 22.5 mg-N⋅ gMLVSS−1 ⋅h−1 at batch exam. 16S rRNA amplicon sequencing indicated that Cloacibacterium sp. was the most abundant in the granular sludge with detection rate of 6.11% to 12.95%. Also, propionate-producing bacterium Paludibacter sp., acetate-utilizing denitrifying bacterium Acidovorax sp. and Dechloromonas sp. were also abundant in the granular sludge. Denitrifying granular sludge was successfully formed in the USB reactor treating real municipal sewage with sodium nitrate feeding.