This paper is a contribution to the understanding of the possibilities and limitations of the socalled HYPRO-concept, a compact process design for nutrient removal where the carbon source for the denitrification process is provided by hydrolysis of the pre-precipitated sludge. The objective of the study was to investigate how efficiently biologically hydrolysed sludge is utilized in a biofilm process. The results show that only the volatile fatty acids in the hydrolysed sludge were utilized as carbon source. The denitrification kinetics were not influenced by the particulate and colloidal materials that adsorbed to the biofilm. The biofilms in the present study were thick (> 900 μm) and porous, and the denitrification rate could be described by a hyperbolic Monod-type function with respect to both the nitrate and the volatile fatty acids concentration. The diffusion resistance is included and expressed by an artificial “half-saturation” constant, K*. The maximum denitrification rate was rNO3−Nmax = 0.567 g NO3-N/g VS · d, K*NO3−N = 1.4 mg NO3-N/l and K*CODVFA = 3.0 mg CODVFA/l. The stoichiometric consumption ratio between soluble COD and nitrate was found to be 4.5 ± 0.6 g CODs/g NO3-N. The specific growth rate was μ = 0.61 ± 0.12 d−1 and the yield coefficient was YCOD = 0.22 ± 0.04 g VS/g COD.