Abstract The potential of source-diverted graywater reuse mainly relies on the efficiency and cost of graywater treatment technology. Oxygen (O 2 ) supply and utilization rate directly determine the energy consumption and pollutants removal rate in the biological graywater treatment. This study developed a gravity flow self-supplying O 2 and easy-to-maintain bio-enhanced granular-activated carbon dynamic biofilm reactor (BhGAC-DBfR) for on-site graywater treatment. Results showed that increasing of saturated/unsaturated ratio led to the continuous growth of biomass on GAC surface. Division of saturated and unsaturated zones favors the formation of aerobic-anoxic-anaerobic biofilm in the reactor. A saturated/unsaturated ratio of 1:1.1 achieved the maximum removal rate of chemical oxygen demand (COD), linear alkylbenzene sulfonates (LAS), ammonia nitrogen, and total nitrogen at 98.3%, 99.4%, 99.8%, and 83.5%, respectively. Key is that adsorption and biodegradation play important and distinct roles in the quick uptake and continuous removal of both organics and N in the system. The related genus and enzymes functional for LAS mineralization, deamination of organic N, ammonium oxidation, and nitrate respiration enabled the efficient and simultaneous removal of organics and N in the BhGAC-DBfR. This study offers a promising engineering alternative technology with great potential to achieve efficient and low-energy-input graywater treatment.