Selective nitrification and granulation have been carried out in a pilot scale air-lift sequencing batch reactor (SBR) for stable and economical nitrogen removal from wastewater. The SBR showed about 100% nitrification efficiency up to 1.0 kg ${NH_4}^+-N/m^3{cdot}d$, about 90% efficiency at 1.0-2.0 kg ${NH_4}^+-N/m^3{cdot}d$, and it was less than 90% when the load was higher than 2.0 kg ${NH_4}^+-N/m^3{cdot}d$. Nitrite accumulation was induced by selective inhibition of nitrite oxidizing bacteria by free ammonia inhibition and dissolved oxygen limitation. For the purpose, high nitrite ratio (> 0.95) was obtained by keeping the pH higher than 8.0 and dissolved oxygen lower than 1.5 mg/L. In addition, sludge granulation was achieved by keeping reactor settling time to 5 minutes to wash out poor settling sludge and to promote the growth of granulation sludge. The operation accelerated sludge granulation and the sludge volume index (SVI) decreased and stably maintained to less than 75 in 60 days.