N2O-production was investigated during nitrogen removal using aerobic granular sludge (AGS) technology. A pilot sequencing batch reactor (SBR) with AGS achieved an effluent in accordance with national discharge limits, although presented a nitrite accumulation rate of 95.79% with no simultaneous nitrification–denitrification. N2O production was 2.06 mg L−1 during the anoxic phase, with N2O emission during air pulses and the aeration phase of 1.6% of the nitrogen loading rate. Batch tests with AGS from the pilot reactor verified that at the greatest COD/N ratio (1.55), the N2O production (1.08 mgN2O-N L−1) and consumption (up to 0.05 mgN2O-N L−1), resulted in the lowest remaining dissolved N2O (0.03 mgN2O-N L−1), stripping the minimum N2O gas (0.018 mgN2O-N L−1). Conversely, the carbon supply shortage, under low C/N ratios, increased N2O emission (0.040 mgN2O-N L−1), due to incomplete denitrification. High abundance of ammonia-oxidizing and low abundance of nitrite-oxidizing bacteria were found, corroborating the fact of partial nitrification. A denitrifying heterotrophic community, represented mainly by Pseudoxanthomonas, was predominant in the AGS. Overall, the AGS showed stable partial nitrification ability representing capital and operating cost savings. The SBR operation flexibility could be advantageous for controlling N2O emissions, and extending the anoxic phase would benefit complete denitrification in cases of low C/N influents.