To study the hydraulic characteristics of the continuous aerobic granule reactor and the effecting factors of nitrification, NaCl solution was emptied into the reactor as the tracer to testify the specific conductivity of water. Hydraulic experiment results showed that the flow pattern of the reactor was plug flow which was not ideal. The single factor test was conducted with temperature, pH, dissolved oxygen, ratio of carbon and nitrogen, hydraulic retention time. Then orthogonal experiment was studied with the optimal method. The results show that the factors influencing short-cut nitrification are pH, temperature, hydraulic retention time, dissolved oxygen and ratio of carbon and nitrogen. The optimal factors combination is that pH = 8.0, t = 29°C, DO = 1.0 mg/L, HRT = 15 h, C/N = 5. Under this conditions the reactor rans for one month. The average accumulation of NO2--N/NOx--N exceeds 90%. The removal efficiency of ammonia nitrogen and COD are more than 85% and 90%.