Algal biomass cultivated by wastewater is potentially useful resource for biodiesel production. However, little is known about algal nutrient metabolism and microbial interaction with bacteria under real municipal wastewater condition. In this work, we characterized nitrogen and phosphorus removals of municipal wastewater by a representative wastewater-growing algal population. Ankistrodesmus gracilis SAG 278-2, and analyzed its ecological interaction with wastewater bacterial communities. Compared to wastewater sludge itself, algal-bacterial co-culture improved nutrient removal. According to bacterial community analysis with 16S rRNA genes, a selective and dominant growth of a Unclassified Alcaligenaceae population resulted from algal growth in the algal-bacterial co-culture. The selectively stimulated bacterial population is phylogenetically close to Alcaligenes faecalis subsp. 5659-H, which is known to be co-present interact with algae in aquatic environment. These findings suggest that algal growth/metabolism may have effects on selection of a specific bacterial population in algal-bacterial co-cultures that can efficiently remove nutrients from municipal wastewater.