Direct anaerobic digestion of dewatered sludge with total solids (TS) content of 15-20% was tested in a horizontal digester for one and half years. The system kept stable with pH 7-8. The concentration of volatile fatty acids was lower than 800 mg/L, free ammonia nitrogen was lower than 200 mg/L, and total alkalinity kept higher than 6000 mg/L. The performance was influenced by organic load rate (OLR) and organic content in feed sludge. When volatile solids (VS) in TS of feed sludge reached 60-65% at OLR 3.50-3.70 g/(L.d), the process exhibited the best performance with organic removal rate of 32.19 +/- 7.73% and methane production of 156.86 +/- 13.05 ml/g VS added. Microbial analyses indicated that Methanosarcina became predominant and Methanosaeta almost disappeared. Moreover, hydrogenotrophic and methylotrophic methanogens accounted for 18.13-29.40% and 11.58-29.56% of the total, respectively. These provide a new guideline for small-scale or centralized sludge treatment.