The reason of circulating treated wastewater (WW) in UASB reactors is the effective use of alkalinity. Generally, treated WW is circulated into the bottom of UASB reactor. Such method of circulation, however, does not ensure a stable condition in the reactor under higher loading rates. An improved method of circulation of treated WW in UASB reactor was investigated in this study. In this new method, called partial circulation method, WW was circulated into the middle of sludge bed. The experimental results confirmed that the method is not only capable of tolerating higher loading rates, but also can use the alkalinity more effectively. Experiments were conducted to investigate the shifting of the position of microorganisms in the reactor due to relocation of circulation. Methane producing bacteria was found to be shifted to upper parts of the sludge bed, while bottom parts of the bed was predominantly occupied by acid forming bacteria. Similarly, laboratory experiments were conducted to compare USAB reactors with complete circulation, partial circulation, and no circulation. In the partial circulation method, wash-out of SS was less and consequently effluent quality was better as compared to complete circulation. The investigation on the effect of reduction of buffer solution in substrate revealed that partial circulation method has a higher tolerance under low buffer conditio as compared to the complete circulation method.