Dechlorination of tetrachloroethene, also known as perchloroethylene (PCE), was investigated in an upflow anaerobic sludge blanket (UASB) reactor after incorporation of the strictly anaerobic, reductively dechlorinating bacterium Dehalospirillum multivorans into granular sludge. This reactor was compared to the reference 1 (R1) reactor, where the granules were autoclaved to remove all dechlorinating abilities before inoculation, and to the reference 2 (R2) reactor, containing only living granular sludge. All three reactors were fed mineral medium containing 3 to 57 µM PCE, 2 mM formate, and 0.5 mM acetate and were operated under sterile conditions. In the test reactor, an average of 93% (mole/mole) of the effluent chloroethenes was dichloroethene (DCE), compared to 99% (mole/mole) in the R1 reactor. The R2 reactor, with no inoculation, produced only trichloroethene (TCE), averaging 43% (mole/mole) of the effluent chloroethenes. No dechlorination of PCE was observed in an abiotic control consisting of sterile granules without inoculum. During continuous operation with stepwise-reduced hydraulic retention times (HRTs), both the test reactor and the R1 reactor showed conversion of PCE to DCE, even at HRTs much lower than the reciprocal maximum specific growth rate of D. multivorans, indicating that this bacterium was immobilized in the living and autoclaved granular sludge. In contrast, the R2 reactor, with no inoculation of D. multivorans, only converted PCE to TCE under the same conditions. Immobilization could be confirmed by using fluorescein-labeled antibody probes raised against D. multivorans. In granules obtained from the R1 reactor, D. multivorans grew mainly in microcolonies located in the centers of the granules, while in the test reactor, the bacterium mainly covered the surfaces of granules.