This study aims to investigate the nitrous oxide (N2O) emission in an aerobic granulation sequencing batch airlift reactor (SBAR) and the associated microbial community of aerobic granular sludge at ambient temperature (18 +/- 3)degrees C. After 48 days of operation, 1-2 mm granules were obtained and excellent chemical oxygen demand (COD) and ammonium (NH4+ - N) removal efficiencies were stably achieved. N2O concentration in the off gas was maximal at the beginning of the aerobic period and stabilized at a lower concentration after an initial peak. (0.60 +/- 0.17, n = 3) % of the total nitrogen load to the SBAR was emitted as N2O. A dramatic change in the microbial community structure was noted between the initial seed sludge and the final mature aerobic granular sludge. Nitrosospira was identified to be the dominant ammonium oxidizing bacteria (AOB) which was attributed as the dominant source of N2O production in aerobic granular sludge by analysis of 16S rDNA sequences.