A novel two-sludge system of anaerobic anoxic oxic-biological contact oxidation (A(2)/O-BCO) was developed for high-efficiency utilization of influent carbon sources treating wastewater with low carbon/nitrogen (COD/N) ratio. Unlike traditional A(2)/O process, the oxidation of ammonium (NH4+-N) in this system mainly took place in the BCO reactor through nitrate (NO3--N) recycling to provide electron acceptors for denitrifying phosphorus removal. The results showed that the A(2)/O reactor achieved the efficient utilization of carbon sources, with 75% chemical oxygen demand (COD) in the anaerobic zone being consumed to synthesize poly-beta-hydroxyalkanoates (PHA). The PHA utilization rate in the anoxic zone was more than 70% with the denitrifying phosphorus removal of 97.83%. The batch tests of phosphorus accumulating organisms (PAOs) and denitrifying PAOs (DNPAOs) activities showed that the DNPAOs accounted for 73.80% of the PAOs in the system. The A(2)/O sludge of lower extracellular polymeric substances (EPS) production exhibited a better settling ability than conventional denitrification and phosphorus removal processes. The denitrifying phosphorus removal process of higher phosphorus percentage promoted the formation of granular sludge, which was confirmed by scanning electron microscopy (SEM) and energy dispersive spectrometry (EDS). The fluorescence in situ hybridization (FISH) results showed that PAOs became dominant with low amount of nitrifiers in the A(2)/O reactor, and nitrifiers were enriched in the BCO reactor. (C) 2015 Elsevier B.V. All rights reserved.