This study employed a laboratory-scale continuous up-flow bio-contact oxidation reactor to treat 50 L/day of municipal wastewater in Al Rumaitha City, located north of Al Muthanaa Province in Iraq. The reactor configuration consisted of two anoxic-aerobic reactors nested inside each other, with a 1:3 volume ratio of anoxic to aerobic zones. Both the anoxic and aerobic reactors were loaded with K1 bio-media, filling them to 50% capacity for fixing and preserving the biomass. The reactors were operated in a mode that achieved full nitrification-denitrification without any sludge return, relying solely on internal recycling from the aerobic to the anoxic reactor. After biofilm formation on the carriers, three distinct hydraulic retention times (HRTs) were investigated—ranging from 24 to 12 hours—to evaluate their impact on removing biological nutrients from municipal sewage. In this operational approach, the preferred internal recycle ratio and gas/water ratio for effective nitrogen removal were a complete feed rate recycle of 100% and a ratio of 1:5, respectively. The experiment results highlighted that a 24-hour hydraulic retention time was most suitable for the simultaneous removal of organic carbon (COD) and nutrients. During this period, average removal efficiencies were found to be 93.51% for organic matter (COD), 94.50% for ammonium (NH4+), 60.98% for total nitrogen (TN), and 67.57% for total phosphorus (TP). Furthermore, the aerobic bio-contact oxidation reactors maintained an average dissolved oxygen (DO) concentration of 4.89 mg/L. In contrast, the anoxic bio-contact oxidation reactors exhibited a lower average DO concentration of 0.38 mg/L.