Past research on AGS (aerobic granular sludge technology) has mainly focused on macro-environment factors, such as settling time, feeding pattern, OLR (organic loading rate), SRT (sludge retention time), among others, and their effects on the granulation process. The biomass granulation process, however, is significantly affected by the micro-environment surrounding these biomass aggregates. In this research, an in silico computational approach was adopted to study the impact of the micro-environment on the biomass granulation process. A 2-D biofilm model based on the cellular automata algorithm and computational fluid dynamics was used to simulate the development of an individual biomass aggregate under specific hydrodynamic and substrate availability conditions. The simulation results indicated that shear and bulk substrate concentration combined to create the optimal conditions for aerobic granule formation. This process can be characterized by the RT (reversed Thiele) modulus value, which is the ratio of the maximum substrate transport over the maximum substrate reaction rate and an indicator of substrate availability. For AGS formation, the RT value should be greater than 0.1. Many common strategies, such as the application of batch reactors, selection for slow-growing microorganism, F/M (food/mass) ratio adjustment, feast and famine condition, and short settling time, for biomass granulation production can be explained by the RT value. The results suggest that rethinking unit process configurations in wastewater treatment facilities will be required to achieve reliable AGS formation.