The increasing global population and industrialization have led to a significant rise in wastewater generation, necessitating the development of sustainable, efficient, and eco-friendly wastewater treatment methods. A profound investigation is required to study the complex interactions between diverse microbial communities that play a vital role in the biodegradation of pollutants and nutrient removal. The microorganisms widely involved in the biological wastewater treatment process include nitrifying bacteria, denitrifying bacteria, phosphate-accumulating microorganisms, anammox bacteria, methanogenic archaea, sulphate-reducing bacteria, and fermentative bacteria. This chapter describes the exploration of microbial niches as a promising approach to enhance biological wastewater treatment, focusing on resource recovery and nutrient removal. In addition, it highlights the critical challenges and limitations of employing microbial niche-based wastewater treatment. The key challenges discussed include the microbial communities’ sensitivity to complex environmental parameters such as pH, temperature, dissolved oxygen, substrate availability, and toxicity inhibitors. Process engineering is critical in effectively screening the potent microorganisms in treating wastewater. On this basis, various reactor systems, such as membrane bioreactors, fixed bed biofilm reactors, and sequential batch reactor systems, were designed to enable microbial growth. Providing suitable microbial niches can produce value-added products such as bioplastics, bioenergy, and biofertilizers during wastewater treatment, leading to a circular economy. In conclusion, understanding microbial niches enables sustainable and efficient biological wastewater treatment.