A modified sludge process reduction activated sludge (SPRAS) technology was developed by inserting a sludge process reduction (SPR) module, composed of an aeration tank and a settler, before the activated sludge system was proposed in this study. Compared with the anaerobic/anoxic/aerobic (AAO) process, the SPRAS resulted in a remarkable decrease in sludge production by 76.6%; sludge decay owing to lengthy solids retention time (about 121.5 d) could be the major cause. During the 217-day operation, the oxidation-reduction potential (ORP) (from 54 to −198 mV) and pH (from 7.8 to 5.0) at the bottom of the SPR settler gradually decreased, and low ORP and pH were in favor of sludge reduction in the SPRAS system. The insertion of the SPR module improved the removal efficiencies of suspended solids, chemical oxygen demand and ammonium nitrogen, and total nitrogen concentration in the effluent was reduced from 23.89 ± 4.82 to 14.16 ± 3.98 mg/L by 50% influent bypassing the SPR module. These results indicated that the SPRAS process could produce much less excess sludge and guarantee better effluent quality than the AAO process.