Reducing nitrous oxide (N₂O) emissions from biological wastewater treatment is critical for achieving low-carbon environmental goals. In this study, a Chlamydomonas reinhardtii -driven algal–bacterial granular sludge system was successfully established in a photo-sequencing batch reactor to enhance nitrogen removal while suppressing N₂O generation. Compact granules formed within 48 days, exhibiting good settling ability (SVI₅/SVI₃₀ = 1.0), an average diameter of 0.5 mm, and a mixed-liquor suspended solid concentration of 2.1 g/L. Algal enrichment was confirmed by an increase in chlorophyll-a to 6.6 mg/g-VSS and substantial accumulation of protein-rich extracellular polymeric substances, which improved granule stability and mass transfer. The system achieved efficient pollutant removal when treating synthetic municipal wastewater, maintaining a chemical oxygen demand removal efficiency of approximately 90% and total nitrogen removal of up to 69.4%, with effluent NH₄⁺-N consistently below 1.6 mg/L. Notably, the N₂O emission factor decreased from 4.2 to 0.4 g N₂O-N/kg N-removed, which is lower than that of conventional activated sludge processes. These results demonstrate the potential of microalgae-driven granulation as a promising low-carbon biotechnology for sustainable wastewater treatment.