This research integrates two different concepts of anaerobic biotechnology- two-phase anaerobic treatment and anaerobic granular sludge bed technology, in treatment of colored wastewaters from textile industries. Four anaerobic reactors based on upflow anaerobic sludge blanket (UASB) technology were used as acid reactors and an expanded granular sludge bed (EGSB) reactor was used as a methane reactor. A conventional single-phase anaerobic reactor, working on EGSB technology was run in parallel to compare the performances of the two systems. Reactors were operated at different hydraulic retention times. The results from the study, which span over a period of 400 days, indicated that the two-phase system produces a higher quality of effluent in terms of color, COD and suspended solids than single-phase anaerobic treatment when operated under similar conditions. Alkalinity requirement of two-phase system was also observed to be lower than that of single-phase system which is important regarding design consideration. © IWA Publishing 2008.