Modification of a conventional activated sludge process by inserting a sludge holding tank in a sludge return line forms an oxic-settling-anaerobic (OSA) process that may provide a cost-effective way to reduce excess sludge production in activated sludge processes. In this paper we systematically evaluate the following possible scenarios that may explain the reduction of excess sludge in the OSA process: (i). energy uncoupling, (ii). domination of slow growers, (iii). soluble microbial products (SMPs) effect and (iv). sludge decay in the sludge holding tank under a low oxidation-reduction potential (ORP) condition. Results show that only the final scenario may reasonably explain this reduction. It has also been found that the sludge decay process in the sludge holding tank may involve the reduction of the cell mass.