This paper presents the experimental and theoretical development of a method for predicting the optimal operating conditions for an innovative biological reactor design. The innovative reactor design consists of an expanded-bed biological reactor with a GAC adsorber inserted into the recycle line. In pilot-scale laboratory experiments, an anaerobic expanded-bed GAC reactor with a GAC adsorber in the recycle line (innovative reactor design) was compared with a single stage anaerobic expanded-bed GAC reactor. The synthetic wastewater used was composed of acetate and 3-ethylphenol (3-ep) at influent replacement of GAC was used in both reactors as a control strategy to maintain the 3-ethylphenol concentration below inhibitory levels. GAC was replaced from only the GAC adsorber of the innovative reactor design, while GAC was replaced directly from the single-stage GAC reactor. Superior steady-state performance of the innovative reactor design was attributed to long sludge ages and excellent operational control which optimized biodegradation of the inhibitory/refractory compound, 3-ep. Batch tests to characterize the biodegradation of both acetate and 3-ep and adsorption isotherm studies with 3-ep and GAC were done during most steady-states. These tests independently characterized the removal mechanisms within the reactors.