Up-flow anaerobic bioreactors are widely applied for high-rate digestion of industrial wastewaters and rely on formation, and retention, of methanogenic granules, comprising of dense, fast-settling, microbial aggregates (approx. 0.5–4.0 mm in diameter). Granule formation (granulation) mechanisms have been reasonably well hypothesized and documented. However, this study used laboratory-scale bioreactors, inoculated with size-separated granular sludge to follow new granule formation, maturation, disintegration and re-formation. Temporal size profiles, volatile solids content, settling velocity, and ultrastructure of granules were determined from each of four bioreactors inoculated only with small granules, four with only large granules, and four with a full complement of naturally-size-distributed granules. Constrained granule size profiles shifted toward the natural distribution, which was associated with maximal bioreactor performance. Distinct morphological features characterized different granule sizes and biofilm development stages, including ‘young’, ‘juvenile’, ‘mature’ and ‘old’. The findings offer opportunities toward optimizing management of high-rate, anaerobic digesters by shedding light on the rates of granule growth, the role of flocculent sludge in granulation and how shifting size distributions should be considered when setting upflow velocities.