Efficiency of nitrogen removal by activated sludge at the presence of oxygen was investigated in relation to the retention time (24 h and 12 h) and substrate condition in the reactor. The municipal waste with sodium acetate was used as carbon source. In both presented series the ratio CN in the reactor was about 6.6:1. The activated sludge loading was 0.08 g/gd and 0.14 g/gd, solids retention time was 30.6 d and 13.6 d, respectively. Two fold reduction of retention time causes decrease of the nitrogen removal efficiency. At the solids retention time 30.6 d concentration of PHB was high in opposite to the second series. Nitrogen removal at the low activated sludge loading is possible in the presence of storage material as a carbon source for endogenous denitrification.