Sludge characteristics available inside the reactor are of vital importance to maximize advantages of UASB reactor. The organic loading rate and sludge loading rate applied during start-up are among the important parameters to govern the sludge characteristics. Effects of these loading rates on the characteristics of the sludge developed are evaluated in six laboratory scale UASB reactors. The sludge characteristics considered are VSS/SS ratio of the sludge, sludge volume index, specific gravity, settling velocity and metal contents of the sludge developed under different loading rates. The experimental results indicate that, for developing good characteristics sludge, during primary start-up from flocculent inoculum sludge, organic loading rate and sludge loading rate should be in the range of 2.0–4.5 kg COD/m3 d and 0.1–0.25 kg COD/kg VSS d, respectively (chemical oxygen demand, COD). Proper sludge granulation and higher COD removal efficiency will be achieved by these loading rates.