In this study treatment of palm oil mill effluent (POME) was investigated using aerobic oxidation based on an activated sludge process. The effects of sludge volume index, scum index and mixed liquor suspended solids during the acclimatizing phase and biomass build-up phase were investigated in order to ascertain the reactor stability. The efficiency of the activated sludge process was evaluated by treating anaerobically digested and diluted raw POME obtained from Golden Hope Plantations, Malaysia. The treatment of POME was carried out at a fixed biomass concentration of 3900+/-200mg/L, whereas the corresponding sludge volume index was found to be around 105+/-5mL/g. The initial studies on the efficiency of the activated sludge reactor were carried out using diluted raw POME for varying the hydraulic retention time, viz: 18, 24, 30 and 36h and influent COD concentration, viz: 1000, 2000, 3000, 4000 and 5000mg/L, respectively. The results showed that at the end of 36h of hydraulic retention time for the above said influent COD, the COD removal efficiencies were found to be 83%, 72%, 64%, 54% and 42% whereas at 24h hydraulic retention time they were 57%, 45%, 38%, 30% and 27%, respectively. The effectiveness of aerobic oxidation was also compared between anaerobically digested and diluted raw POME having corresponding CODs of 3908 and 3925mg/L, for varying hydraulic retention time, viz: 18, 24, 30, 36, 42, 48, 54 and 60h. The dissolved oxygen concentration and pH in the activated sludge reactor were found to be 1.8-2.2mg/L and 7-8.5, respectively. The scum index was found to rise from 0.5% to 1.9% during the acclimatizing phase and biomass build-up phase.