The ultrastructure of bacterial granules that were maintained in an upflow anaerobic sludge bed and filter reactor was examined. The reactor was fed a sucrose medium, and it was operated at 35°C. Scanning and transmission electron microscopy revealed that the granular aggregates were three-layered structures. The exterior layer of the granule contained a very heterogeneous population that included rods, cocci, and filaments of various sizes. The middle layer consisted of a slightly less heterogeneous population than the exterior layer. A more ordered arrangement, made up predominantly of bacterial rods, was evident in this second layer. The third layer formed the internal core of the granules. It consisted of large numbers of Methanothrix-like cells. Large cavities, indicative of vigorous gas production, were evident in the third layer. On the basis of these ultrastructural results, a model that presents a possible explanation of granule development is offered.