An advanced wastewater treatment process (SIPER) was developed to simultaneously reduce sludge production, prevent the accumulation of inorganic solids, recover phosphorus, and enhance nutrient removal. The ability to recover organic substance from excess sludge to enhance nutrient removal (especially nitrogen) and its performance as a C-source were evaluated in this study. The chemical oxygen demand/total nitrogen (COD/TN) and volatile fatty acids/total phosphorus (VFA/TP) ratios for the supernatant of the alkaline-treated sludge were 3.1 times and 2.7 times those of the influent, respectively. The biodegradability of the supernatant was much better than that of the influent. The system COD was increased by 91 mg/L, and nitrogen removal was improved by 19.6% (the removal rate for TN reached 80.4%) after the return of the alkaline-treated sludge as an internal C-source. The C-source recovered from the excess sludge was successfully used to enhance nitrogen removal. The internal C-source contributed 24.1% of the total C-source, and the cyclic utilization of the system C-source was achieved by recirculation of alkaline-treated sludge in the sludge reduction, inorganic solids separation, phosphorus recovery (SIPER) process.