Untreated tannery wastewaters contain high levels of organic materials and nitrogen. Thernprincipal forms of nitrogen in tannery wastewater are organic nitrogen (mainly proteins) andrnammonia obtained from hides and skins. The presence of nitrogen in wastewater discharge can bernundesirable because it has ecological impacts and can affect public health. Methemoglobin,rneutrophication and depletion of dissolved oxygen in aquatic ecosystems are some of the majorrnproblems related to release of nitrogenous wastewater to the environment. Because of thesernpollution problems, nitrogenous compounds must be eliminated or reduced to the acceptablernlimits together with the organic carbon during wastewater treatment. The nitrogen in wastewaterrnwill be converted to the harmless nitrogen gas by microbial processes mainly throughrnammonification, nitrification and denitrification.rnThe objective of this study was to evaluate sludge biomass activity obtained from alkaliphilicrnenvironment for removal of nitrogen and organic matter from tannery effluent using lab-scalernpredenitrification/nitrification activated sludge system. This was fed with simulated and actualrntannery wastewater. The raw tannery wastewater was obtained from the Modjo Tannery. Thernsystem was inoculated with sludge biomass prepared using sediment slurry from alkaline sodarnlake and artificial wastewater in batch reactor. The potential of sediment sludge to removernnitrogen and organic matter was analyzed using COD, BOD, TN/TKN, NH+rn4-N, NO-rn3-N, S2- andrnSO4rn2- concentrations. The sludge activity was also tested for the occurrence of denitrifiaction andrnnitrification at higher pH using Nitrate and Ammonia Uptake Rates (NUR and AUR). The systemrnwas operated at three different organic loading rates (OLR) (10, 5 and 2.5 gm l-1 d-1).rnThe influent had an average concentrations of 8193.33, 2355, 645.67, 686, 222.33 and 564.67 mgrnl-1 COD, BOD, TKN, NH4rn+-N, S-2 and SO4rn2-, respectively, at 10 gm l-1 d-1 OLR. Average effluentrnconcentrations of the aforementioned parameters at 5 gm l-1d-1 OLR were 4209.33, 1409.33, 834,rn578, 256.67 and 458.67 mg l-1 while at 2.5 gml-1d-1 OLR were 1886.67, 598.33, 672.33, 280.33,rn241.67 and 401.33 mg l-1. The sediment sludge biomass was able to achieve 65.3, 89.2 and 97.1 % removal of COD andrn59.7, 87.8 and 97.3 % removal of BOD at 10, 5 and 2.5 gm l-1 d-1 of OLRs, respectively. Inrnaddition, TKN removal efficiencies of 44.2, 86.7 and 96.6 % and NH4rn+-N removal efficiencies ofrn62.2, 74.5 and 94.8 % were achieved at 10, 5 and 2.5 gm l-1 d-1 of OLRs, respectively. Thernremoval efficiency of sulphide was 38.2, 89.7 and 92.3 % at respective OLRs. Their potential tornremove nitrate and ammonia nitrogen during NUR and AUR Test were 69.5 and 82.8 % at rangernpH values of 10.2 and 10.21 and 9.50 and 9.75, respectively. Maximum removal efficienciesrn(97.1, 97.3, 96.6, 94.8 and 92.3 %) of COD, BOD, TKN, NH4rn+-N and S2- were obtained at 2.5 gmrnl-1d-1 of OLR. At this OLR, the final COD, BOD, TKN, NH4rn+-N, NO3rn--N and S-2 were 55.33,rn14.67, 22, 14.6, 4.53 and 18.67 mg l-1, respectively. This is in line with the effluent dischargernlimit values in Ethiopia. Thus, alkaliphiles could be a good alternative to be used as inoculumsrnfor nitrogen and organic matter removal from industrial wastewaters.rnKey words/phrases: Activated sludge, alkaliphiles, ammonification, nitrification, denitrification.