This study optimized hydraulic retention time (HRT) to improve p-cresol and chemical oxygen demand (COD) removal and promote algal-bacterial granular sludge (ABGS) formation in Chinese fermented liquor wastewater treatment. At an HRT of 4 h, no granules formed in the sequential batch reactor, and after 30 days, the removal efficiencies were low for both COD (58.5 %) and p-cresol (21.6 %). In contrast, compact granules developed at HRT 8 and 12 h. The HRT of 8 h achieved the highest removal efficiencies (COD: 96.0 %, p-cresol: 91.3 %), outperforming the HRT of 12 h (COD: 95.1 %, p-cresol: 82.7 %). Microbial analysis identified Rhodobacteraceae and Pseudomonas as key p-cresol degraders. Metagenomic analysis revealed a higher abundance of benzoate degradation genes at an HRT of 8 h compared to 12 h, with Acidovorax predominantly contributing at 8 h and Hydrogenophaga at 12 h. These findings provide insights into the optimization of liquor wastewater treatment.