Salinity can affect the performance of biological wastewater treatment in terms of nutrient removal. The effect of salt on aerobic granular sludge (AGS) process in terms of granulation and nutrient removal was examined in this study. Experiments were conducted to evaluate the effect of salt (15 g/L NaCl) on granule formation and nutrient removal in AGS system started with flocculent sludge and operated at DO of 2.5 mg/L (phase I). In addition, experiments were conducted to evaluate the effect of gradually increasing the salt concentration (2.5 g/L to 15 g/L NaCl) or increasing the DO level (2.5 mg/L to 8 mg/L) on nutrient removal in AGS system started with granular sludge (phase II) taken from an AGS reactor performing well in terms of N and P removal. Although the addition of salt in phase I did not affect the granulation process, it significantly affected nutrient removal due to inhibition of ammonia oxidizing bacteria (AOB) and phosphate accumulating organisms (PAOs). Increasing the DO to 8 mg/L or adapting granules by gradually increasing the salt concentration minimized the adverse effect of salt on nitrification (phase II). However, these strategies were not successful for mitigating the effect of salt on biological phosphorus removal. No nitrite accumulation occurred in all the reactors suggesting that inhibition of biological phosphorus removal was not due to the accumulation of nitrite as previously reported. Also, glycogen accumulating organisms were shown to be more tolerant to salt than PAO II, which was the dominant PAO clade detected in this study. Future studies comparing the salinity tolerance of different PAO clades are needed to further elucidate the effect of salt on PAOs.