Thermophilic anaerobic treatment of acidified and partially acidified wastewater was studied using Upflow Staged Sludge Bed (USSB) reactors. Reactors were composed of various compartments of which each was equipped with a gas-solid separator. This novel approach for thermophilic wastewater treatment led to a reduction or even elimination of major biological and physical limitations of conventional high rate thermophilic conversion processes. The main achievements of the plugflow reactor were i) very low concentrations of volatile fatty acids (VFA) in the effluent, ii) a high degree of sludge retention, and iii) stable reactor performance. The start-up of the reactors was done with either ‘crushed’ mesophilic granular sludge (MGS) or the digested organic fraction of municipal solid waste (OFMSW) as inoculum. A mixture of VFA and a mixture of sucrose-VFA were used as feed. A good operation performance was achieved within 1 month, and the granulation process of the thermophilic biomass was clearly visible after 1-1.5 months of operation. Within 2-3 months, the organic loading rate could be increased up to 100 kg sucrose-VFA-COD m −3 day −1 with a COD removal efficiency exceeding 90% at a HRT of 2-2.5 h. No significant wash-out of the thermophilic biomass was observed despite the extreme biogas load of 40-50 m 3 m −3 reactor day. A certain percentage of sucrose was essential for the thermophilic granulation process; in the reactors treating solely the VFA mixture almost no granules were formed. Nevertheless, also in the latter reactors a satisfactory biomass hold up was observed despite the disperse nature of the sludge. The advantage of using compartmentalized reactors was clearly demonstrated under extreme loading conditions. A typical sequence in the degradation of the partially acidified substrate was found. In the first compartment sucrose was converted, followed by the conversion of butyrate and acetate in the next compartments. Propionate was the most difficult intermediate to degrade, but in the last compartments even this fatty acid was degraded almost completely.