The pathway for removing NO(3)(-) and NH(4)(+) from wastewater in the presence of both CH(4) and O(2) was clarified by studying microbial activity and community. Batch incubation tests were performed to characterize the microbial activity of the sludge, which was acclimatized in a bioreactor in which O(2) and CH(4) were supplied to treat wastewater containing NO(3)(-) and NH(4)(+) . The tests showed that the sludge removed significant amounts of NO(3)(-) and NH(4)(+) in the presence of CH(4) and O(2), and the presence of the activity of methane oxidation, denitrification, nitrification, and anammox in the sludge. It was estimated that the total inorganic nitrogen removal was attributed to denitrification associated with methane oxidation as 53.4%, microbial assimilation as 37.9%, and anammox as 8.7%. Nitrification also contributed to NH(4)(+) decrease as 34.5% and anammox as 6.4%. Anammox activity was unambiguously demonstrated by (29)N(2) production in anaerobic batch incubation with (15)N-labeled inorganic nitrogen compounds. The presence of methane-oxidizing bacteria and candidate denitrifiers in the sludge was shown by denaturing gradient gel electrophoresis of 16S rRNA gene fragments. Clone library analysis of the PCR-amplified 16S rRNA gene fragment using specific primers for aerobic ammonium oxidizer and anammox revealed the presence of these bacteria. The results reveal that complex nitrogen-removal processes occur in the presence of CH(4) and O(2) by methanotroph, denitrifier, aerobic ammonium oxidizer, and anammox.