A laboratory-scale EGSB reactor was operated for 400 days to investigate the effect of a temperature decrease on the physical and microbial characteristics of retained granular sludge. The reactor was inoculated with 20°C-grown granular sludge and started up at 15°C. The influent COD of synthetic wastewater was set at 0.6-0.8 g COD/L. The process temperature was reduced stepwise from 15°C to 5°C during the experiment. Decreasing the temperature from 15°C to 10°C decreased COD removal efficiency. However, continuous operation of the EGSB reactor at 10°C led to an efficient treatment of wastewater (70% of COD removal, 50-60% of methane recovery). Unfortunately, at 5°C COD removal efficiency drastically decreased and the amount of removed COD dropped to half of that at 15°C. A decrease in sludge concentration and a major deterioration of the retained sludge's settleability were observed while the reactor was operated at 5°C. We confirmed the remarkable increase of methanogenic activity of retained sludge at 15-20°C due to the low temperature operation of the reactor. The increment of activity of retained sludge as compared with seed sludge was higher at 20°C for acetate (3.9 times higher) and at 15°C for H2/CO2 (6.4 times higher). Changes in the microbial structure of retained sludge with respect to Archaea were investigated by 16S rDNA-targeted DGGE analysis and cloning. This revealed that the genus Methanospirillum, a hydrogen-utilizing methanogen, proliferated. An expected decrease in some Methanobacterium spp. due to low temperature operation of the reactor occurred. On the other hand, genus Methanosaeta was abundant as an acetoclastic-methanogen throughout the experiment.