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Granular sludge for simultaneous nitrification, denitrification and phosphorus removal (SNDPR) was generated and studied in a lab-scale sequencing batch reactor (SBR). The SBR was monitored for 450 days during which the biomass was transformed from flocs to granules, which persisted for the last 130 days of operation. Short sludge settling time was employed to successfully generate the granules, with the 10th and 90th percentiles of diameter being 0.7 and 1.6 mm respectively. Good phosphorus removal and nitrification occurred throughout the SBR operation but only when granules were generated were denitrification and full nutrient removal complete. Fluorescence in situ hybridization and oxygen microsensors were used to study the granules at a microscale. Accumulibacter spp. (a polyphosphate-accumulating organism, PAO) and Competibacter spp. (a glycogen non-polyphosphate-accumulating organism, GAO) were the most abundant microbial community members (together 74% of all Bacteria) and both are capable of denitrification. In the aerobic period of the SBR operation, the oxygen penetrated 250 μm into the granules leaving large anoxic zones in the centre part where denitrification can occur. In granules > 500 μm in diameter, Accumulibacter spp. was dominant in the outermost 200 μm region of the granule while Competibacter spp. dominated in the granule central zone. The stratification of these two populations between the outer aerobic and inner anoxic part of the granule was highly significant (P < 0.003). We concluded that the GAO Competibacter spp., and not the PAO Accumulibacter spp., was responsible for denitrification in this SBR. This is undesirable for SNDPR as savings in carbon demand cannot be fulfilled with phosphorus removal and denitrification being achieved by different groups of bacteria.