This study investigated the performance and stability of an anaerobic baffled filter reactor in the treatment of algae-laden water from Taihu Lake at several organic loading rates. The study also evaluated the capability of soft filler to train granule sludge and improve the anaerobic environment and sludge activity in the anaerobic baffled reactor (ABR), thereby enhancing the treatment efficiency. The ABR consisted of five rectangular compartments, each of which was 120 cm long, 80 cm wide, 80 cm high, and packed with soft filler. The anaerobic baffled filter reactor was found to be an efficient reactor configuration for the treatment of algae-laden water. The reactor was operated at an organic loading rate of 1.5 kg chemical oxygen demand (COD)/(m 3 d) and an ambient temperature of 30 °C; under these conditions, the COD removal efficiency was 80% and the biogas production rate was 293 mL/(Ld). Moreover, the soft filler increased the biomass retention time and decreased the rate at which solids were washed out from the reactor, promoting an improved spatial distribution of the microbial communities within the compartments. Methanoregula, Methanobacteriaceae, Methanosaeta, Methanoculleu, and Thermogymnomonas were the dominant archaeal species in each compartment during an operational period of approximately 100 days. The protease activity in the reactor decreased longitudinally down the reactor from Compartments 1 to 5, whereas the activity of coenzyme F 420 increased. The soft filler played a key role in successfully treating algae-laden water with the anaerobic baffled filter reactor.