Abstract Protozoan predators form an essential component of activated sludge communities that is tightly linked to wastewater treatment efficiency. Nonetheless, very little is known how protozoan predation is channelled via bacterial communities to affect ecosystem functioning. Therefore, we experimentally manipulated protozoan predation pressure in activated-sludge communities to determine its impacts on microbial diversity, composition and putative functionality. Different components of bacterial diversity such as taxa richness, evenness, genetic diversity and beta diversity all responded strongly and positively to high protozoan predation pressure. These responses were non-linear and levelled off at higher levels of predation pressure, supporting predictions of hump-shaped relationships between predation pressure and prey diversity. In contrast to predation intensity, the impact of predator diversity had both positive (taxa richness) and negative (evenness and phylogenetic distinctiveness) effects on bacterial diversity. Furthermore, predation shaped the structure of bacterial communities. Reduction in top-down control negatively affected the majority of taxa that are generally associated with increased treatment efficiency, compromising particularly the potential for nitrogen removal. Consequently, our findings highlight responses of bacterial diversity and community composition as two distinct mechanisms linking protozoan predation with ecosystem functioning in activated sludge communities.