Granulation of a lactate-degrading consortium which consisted mainly of lactate-degrading acidogens, propionate-degrading acetogens, and methanogens was performed in an upflow anaerobic sludge blanket (UASB) reactor. In the methanogenic fermentation of lactate, total granular sludge concentration retained in the UASB reactor during 180 d of operation was 90.2 g of mixed-liquor suspended solids (MLSS)/l-reactor, corresponding to 47.2 g mixed-liquor volatile suspended solids (MLVSS)/l-reactor. A chemical oxygen demand (COD) removal rate of 58.5 g COD/l-reactor.d was achieved. The ash contents of the granules varied between 44 and 53%. Electron microscopic analysis showed that Methanothrix spp. appeared dominant over the granules. Extracellular polymeric substances (EPS) extracted from the granules were equivalent to 100 to 170 mg/g MLVSS, where the major component was protein rather than carbohydrate or nucleic acid. The size distributions of the granules ranged from 0.2 to 6 mm in diameter. The specific metabolic activities of bacterial trophic groups were the highest for H-2 followed by lactate, acetate, and propionate, which were correlated with the respective population number within the granules.