The effects of formaldehyde on biofilm morphology and biomass activity were investigated in an ultracompact biofilm reactor (UCBR) for carbonaceous wastewater treatment. The wastewater contained a fixed amount of glucose (with a chemical oxygen demand concentration of 600 mg/L) and an increasing concentration of formaldehyde (ranging from 21.4 to 271.1 mg/L). An influent formaldehyde concentration higher than 75 mg/L could facilitate filamentous growth (on biofilm) control and lead to a higher biofilm density, which is desirable as it enhanced the UCBR performance stability. However, at an influent formaldehyde concentration higher than 214.4 mg/L, biomass production was inhibited and deteriorations of biofilm morphology and biomass activity were observed. This study showed that it was desirable to maintain an influent formaldehyde concentration lower than 202.2 mg/L, as this concentration could achieve a good biofilm morphology while not inhibiting its microbial activity.