The potential of nitrification and denitrification of sediment and the density of ammonium-oxidizing bacteria and nitrite-oxidizing bacteria in sediment in water quality purifying system with hydroponic bio-filter method (HBFM) were measured. The variation of nitrification and denitrification potential of the sediment along the stream way was quantitatively studied. The results show that among the sediments from front, middle and retral part of the stream way, the sediment from middle part reached a maximum nitrification potential . nitrification potential of 4.76 x 10(-6) g/(g x h), while the sediment from front part reached a maximum denitrification potential of 8 .1 x 10(-7) g/(g x h). The distribution of nitrification potential accords with the ammonium-oxidizing bacteria density. The key for improving nitrogen removal efficiency of HBFM system consists in changing nitrification & denitrification region distributing and accordingly enhances denitrification process.