Acidogenic reactors commonly operated at short hydraulic retention times (HRT) are liable to cause low chemical oxygen demand (COD) removal and acidogenic efficiency especially under fluctuating feed. Granular sludge as an efficient form for anaerobic microbial community to resist shocks in methanogenic reactors has been widely investigated, which however was less focused in acidogenic reactors. Adding Fe-0 in an acidogenic reactor with propionate as the substrate operated at HRT of 2 h was found to enhance the propionate decomposition and sludge granulation in this study. When increasing the organic load and decreasing pH in the feed, the propionate conversion and COD removal in the reactor with Fe-0 were higher than those in the control reactor. The sludge granulation was well developed in this reactor. Fe-0 advanced the growth of homoacetogenic bacteria that consumed the hydrogen produced in acetification of propionate. The propionate-oxidizing bacteria and homoacetogenic bacteria grew together in the sludge to accelerate hydrogen transfer, which was an important reason for the enhanced propionate decomposition and sludge granulation in the acidogenesis.