The cultivation of aerobic granules in sequencing batch reactor for the biodegradation of p-cresol was studied. The reactor was started with 100 mg/L of p-cresol. Aerobic granules first appeared within one month of start up. The granules were large and strong and had a compact structure. The diameter of stable granules was in the range of 1-5 mm. The integrity coefficient and granules density was found to be 96% and 1046 kg/m3, respectively. The settling velocity of granules was found to be in the range of 2x10(-2)-6x10(-2) m/sec. The aerobic granules were able to degrade p-cresol upto 800 mg/L at a removal efficiency of 88%. Specific p-cresol degradation rate in aerobic granules followed Haldane model for substrate inhibition. High specific p-cresol degradation rate up to 0.96 g p-cresol/(g VSS x day) were sustained upto p-cresol concentration of 400 mg/L. Higher removal efficiency, good settling characteristics of aerobic granules, makes sequencing batch reactor suitable for enhancing the microorganism potential for biodegradation of inhibitory compounds.