In this work, a one-stage dual internal circulation airlift anaerobic/anoxic/aerobic (DCAL-A2O) bioreactor was continuously operated for concurrent removal of nutrients and organics from milk processing wastewater (MPW). Special configuration of the airlift A2O bioreactor created possibility of the formation of desired anaerobic, anoxic and aerobic zones in a single unit. The process functionality of the bioreactor was examined under three influential operating variables i.e. hydraulic retention time (HRT; 7–15 h), air flow rate (AFR; 1–3 L/min) and aerobic volume ratio (AVR; 0.324–0.464). The optimum region was identified at HRT of 13h, AFR of 2L/min and AVR of 0.437, leading to TCOD, TN and TP removal efficiency of 94.5 %, 59.6 %, and 62.2 %, respectively, and effluent turbidity of 8 NTU. The impact of feed biodegradability on the process performance of the bioreactor treating the MPW, soft drink wastewater (SDW) and soybean oil plant wastewater (SOW) was also assessed. From the results, the feed characteristics affected significantly the nutrients removal. Moreover, the feeding location played an effective role in the nutrient removal while treating the MPW at optimum operating conditions. In this study, the change in residual organic matters as soluble microbial products (SMP) was monitored at various operating conditions. In addition, the impact of SMP extracted from sludge, extracellular polymeric substances (EPS) comprising of loosely bound EPS (LB-EPS) and tightly bound EPS (TB-EPS) was analyzed on sludge characteristics as bio-flocculation and settleability properties. According to the obtained data, the increase in operating variables led to the reduction in contents of effluent SMP, sludge SMP, LB-EPS, turbidity, and SVI, thereby, the enhancement in the sludge characteristics. Meanwhile, analysis of microbial communities verified the presence of various functional bacterial species. The cost operating evaluation confirmed the cost effectiveness of the airlift A2O bioreactor in reduction of energy consumption for the MPW treatment.