Crepe rubber industry being a major water polluting industry in Sri Lanka, there is a necessity for developing suitable treatment technologies for management of the problem. Biological treatment methods are accepted in treatment of crepe rubber factory effluent. To ensure a safe and stable operation of a biological treatment system, monitoring of environmental factors is important. Effect of nitrogen content and processing chemicals (as toxic substances) of factory effluent was estimated as environmental factors. Many researches have revealed that a COD: N of 100: (10-1) is beneficial for anaerobic treatment. Varying amounts of nitrogen in crepe rubber factory effluent and the presence of processing chamicals, were found to affect the efficiency of treatment.