A continuous flow reactor or method promotes aerobic granule formation. The reactor may comprise three or four zones that may comprise one or more of an aerobic zone, an alternately aerobic and anoxic zone or discrete aerobic and anoxic zones, and a settling zone. The reactor may have a single sludge removal flow. An anaerobic zone may be located at the bottom of a mass of settled granules. Feed may be introduced through the settled granules generally in a plug flow. An aerobic/anoxic zone may be structured or operated partially like a continuously stirred tank reactor (CSTR) but with aeration varying in space or time. Sludge granules may move intermittently from an aerobic zone to an aerobic/anoxic zone, for example by an air lift pump. A settling zone may have an upflow of >4 m/hr or >5 m/hr and wash off flocculated biomass.