A "fourth generation" down-flow hanging sponge (DHS) Reactor has been developed and proposed as an improved variant of post-treatment system for UASB treating domestic wastewater. This paper evaluates the potential of the proposed combination of UASB and DHS as a sewage treatment system, especially for developing countries. A pilot-scale UASB (1.15 m3) and DHS (0.38 m3; volume of sponge) was installed in a municipal sewage treatment site and constantly monitored for 2 years. UASB was operated at an HRT of 6 h corresponding to an organic load of 2.15 kg-COD/m3 per day. Subsequently, the organic load in DHS was 2.35 kg-COD/m3 per day, operated at an HRT of 2 h. Organic removal by the whole system was satisfactory, accomplishing 96% of unfiltered BOD removal and 91% of unfiltered COD removal. However, nitrification decreased from 56% during the startup period to 28% afterwards. Investigation on DHS sludge was made by quantifying it and evaluating oxygen uptake rates with various substrates. Average concentration of trapped biomass was 26 g-VSS/L of sponge volume, increasing the SRT of the system to 100-125 d. Removal of coliforms obtained was 3-4 log10 with the final count of 10(3) to 10(4) MPN/100 ml in DHS effluent.