This Phase I USDA/NIFA Small Business Innovative Research project examines the feasibility of using endogenous organics derived from waste sludge as the internal carbon source for biological denitrification in a localized sludge digester designed for recirculating aquaculture systems (RAS). The denitrification–stabilization–process employs a sequential aerobic–anoxic operating cycle to mineralize organic solids and subsequently convert nitrate to nitrogen gas without external carbon addition. During the aerobic phase, particulate organics are oxidized to soluble intermediates that serve as readily available electron donors. When aeration is suspended, oxygen is rapidly depleted and denitrifying bacteria use the residual organics to reduce nitrate, achieving simultaneous sludge stabilization and nitrogen removal. This approach seeks to improve water reuse by internally recycling organic carbon, thereby reducing chemical inputs, sludge volume, and nutrient discharge. The study aims to demonstrate high denitrification rates (>1 kg N m⁻³·day⁻¹) and substantial sludge discharge volume reduction (<4 L kg⁻¹ feed) within a compact, low-maintenance system suitable for marine RAS operations. In addition, this phase focuses on determining the optimal aeration sequence timing required to achieve redox conditions conducive to supporting the denitrification performance in an inland closed shrimp (Penaeus vannamei) production system.