A laboratory scale upflow anaerobic sludge blanket (UASB) reactor was designed for treating sugar effluent under ambient condition. Anaerobic sludge and sugar effluent was used as seed and substrate in the reactor. UASB was used to treat sugar effluent at a HRT of 48 hrs and at different OLRs. During the process it was observed that COD removal efficiency and biogas production rates increased with increase in OLR and the average COD removal efficiency of 80% and maximum biogas production of 70% was achieved. From the present study it was concluded that UASB could be used for the efficient treatment of sugar effluent under ambient conditions. Production of bio gas, rich in methane can be used as renewable energy source was additional benefit of the treatment.