The upflow anaerobic sludge blanket (UASB) reactor which was developed in the seventies is considered today as the most popular reactor for anaerobic biological treatment of wastewater. For the past few years, several research in the area of the UASB reactors have been conducted. Nevertheless, the mechanisms by which granules are formed are not yet well understood. This in this article, the state of the art for upflow anaerobic sludge blanket (UASB) reactors is discussed with emphasis on the microbiology of immobilized anaerobic bacteria and the mechanism of granule formation.