The objective of this paper was to introduce the aerobic microbiological reactor technology for wastewater treatment of biodiesel plants and find out the key factors that are involved in membrane fouling. The research was carried out in two steps. In the first step, sulfuric acid of pH 2, 2.5 and 3 was added to biodiesel wastewater and significant reduction in organic pollutants was observed at pH 2.5 such as chemical oxygen demand, and oil and grease were found to be 74–84 and 84.2–92.6 %, respectively. In the second step, microbiological reactor was operated at different hydraulic retention times of 15, 12, 9 and 6 h along with an increase in organic loading rates (range 1–3 g/L day) on individual hydraulic retention times. However, overall chemical oxygen demand and oil and grease removal efficiency remained in the range of 91.7–97.20 and 95.5–97.9 %, respectively, throughout the experiment, while severe membrane fouling was observed with decreasing hydraulic retention time due to decrease in dissolved oxygen concentration and increase in mixed liquid suspended solids, and soluble microbial product containing protein and polysaccharide. At lower hydraulic retention time of 6 h, an increase in particle size was reported as 27.9–62.7 μm, and soluble microbial product containing protein and polysaccharide reported as 20–60 and 19–59 mg/L, respectively. Higher soluble microbial product level led to increase in particle size with irregular shape, which led to severe membrane fouling.