The present study was aimed at the development of aerobic granules in a sequencing batch reactor for the biodegradation of m-cresol. The reactor was started with 100 mg L(-1)of m-cresol. Aerobic granules first appeared within 1 month of the start-up of the reactor. The granules were large and strong and had a compact structure. The diameter of stable granules on day 200 was in the range of 1.5 - 5 mm. The integrity coefficient and density of the granules was found to be 98% and 1046 kg m(-3), respectively. The settling velocity of the granules was found to be in the range of 2-6 x 10(-2) m s(-1). The aerobic granules were able to degrade m-cresol up to 800 mg L(-1) at a removal efficiency of 87%. UV and GC/MS studies confirmed that the biodegradation ofm-cresol occurred via catechol via the ortho-cleavage pathway. The specific m-cresol degradation rate in aerobic granules followed the Haldane model for substrate inhibition. A high specific m-cresol degradation rate of up to 0.718 g m-cresol g(-1)VSS(-1)d(-1) was sustained up to an m-cresol concentration of 400 mgL(-1). The higher removal efficiency and good settling characteristics of aerobic granules make the sequencing batch reactor method suitable for enhancing the microorganism potential for biodegradation of inhibitory compounds.