The effects of hydraulic retention time (HRT) and phenol concentration on the degradation of phenol and p-cresol in wastewater were investigated in two respective UASB (upflow anaerobic sludge blanket) reactors with effluent recirculation at 37 °C for over 440 days. After acclimation, nearly all the phenol and p-cresol at moderate concentrations could be degraded without carbohydrate as a co-substrate. Treating a wastewater containing 800 mg/l of phenol and 300 mg/l of p-cresol at HRT ranging 2–12 hours, the first reactor consistently removed 95% of phenol, 65% of p-cresol and 85% of COD at 8–12 hours of HRT; the efficiency, however, decreased at lower HRT. Treating wastewater containing a constant p-cresol concentration of 400 mg/l at 24 hours of HRT, the second reactor was able to remove 75–80% of COD when the phenol was 1200 and 1500 mg/l; the removal efficiency decreased as phenol concentration further increased. High levels of residual phenol and p-cresol in the effluent suppressed the activity of biogranules. The suppression of bioactivity was not permanent. Biomass was able to regain its activity fully after lowering the phenolic concentrations in the wastewater.