Dried pelletized sludge was compared with digested sewage and granular sludge for use as seed in anaerobic reactors treating organic wastewaters under a mesophilic temperature. The pelletized sludge used in the size range of 0.25 to 0.60 mm was obtained from the digested sewage sludge after it was dried almost completely at a low temperature (35 degrees C). The reactor seeded with the dried pelletized sludge operated efficiently and was not as susceptible to instability due to the changes in loading rates as was the digested sewage sludge. This result was obtained due to high biomass retention in the dried pelletized sludge reactor, similar to the granular sludge reactor.