Palm oil mill effluent (POME) is one of the major issues in the palm oil industry. POME contains high organic materials that can be used as a growth medium for microalgae. This study investigated the performance of immobilized Nannochloropsis oculata in a down-flow hanging sponge (DHS) reactor for the treatment of POME. The reactor was inoculated with N. oculata and continuously supplied with POME that operated in 2 phases for 42 days. The reactor shows excellent performance for the pollutants removal efficiency. In Phase 1, the reactor has successfully removed COD, colour, ammoniacal nitrogen (NH3-N), and phosphate at the highest removal efficiency of 63%, 89%, 75%, and 65%, respectively. In Phase 2, when the influent flow rate was reduced, the removal efficiencies of COD, NH3-N, and phosphate enhanced to 73%, 80%, and 83%, respectively. Meanwhile, the colour removal efficiency was slightly decreased to 80%. These results revealed that N. oculata cultivated in a DHS reactor was able to remove pollutants in POME. The organic contents in POME were utilized as nutrients to support microalgae growth through photosynthesis. In addition, this method could be an alternative method to cultivate microalgae for biofuel production.