The disposal of sewage sludge and the agricultural use of stabilised sludge are decreasing due to more stringent regulations in Europe. An increasing fraction of sewage sludge must,therefore be dewatered, dried, incinerated and the ashes disposed of in landfills. These processes are cost-intensive and also lead to the loss of the valuable phosphate resources incorporated in the sludge ash. The implementation of processes that could reduce excess sludge production and recycle phosphate is therefore recommended. Partial ozonation of the return sludge of an activated sludge system significantly reduces excess sludge production, improves the settling properties of the sludge and reduces bulking and scumming. The solubilised COD will also improve denitrification if the treated sludge is recycled to the anoxic zone. However, ozonation partly kills nitrifiers and could therefore lead to a decrease of the effective solid retention time of the nitrifier, thus reducing the safety of the nitrification. This paper discusses the effect of ozonation on sludge reduction, the operating stability of nitrification, the improvement of denitrification and also presents an energy and cost evaluation.