Pollutants are continuously released into surface waters, which decrease the dissolved oxygen (DO) concentration and leads to the formation of black-odorous water, especially in slow-flowing urban lakes and enclosed small ponds. In situ treatment by artificial aeration or water cycling, coupled with biofilm, can address this problem without occupying large amounts of land. In this study, we designed a novel sponge-based aerobic biofilm reactor (SABR) and evaluated its performance in purifying urban surface water under different conditions. In the urban lake water treatment, the continuous inflow results revealed that the NH4+-N and NO2--N concentrations in the effluent were stable and remained lower than 0.10 mg/L and 0.05 mg/L, respectively. Abrupt increases in the NH4+-N and NO2--N concentrations in the influent and sudden increases in the NH4+-N and NO2--N concentrations in the effluent were observed, and only 4 to 8 days were required for the concentrations to decline below 0.10 mg/L and 0.05 mg/L, respectively. Increases in the polyurethane sponge filling ratios in the SABRs can reduce the DO concentration but do not affect NH4+-N removal. When no biodegradable organic matter was present in the enclosed surface water, the degradation time of NH4+-N from 14.22 to 0.10 mg/L was only 9 days when SABRs were combined with water cycling, which was shorter than the time needed by water cycling alone (16 days), and most of the NH4+-N was converted to NO3--N. When massive amounts of biodegradable organic matter were present in the enclosed surface water, 22 days were required to remove the NH4+-N when SABRs were combined with water cycling. Our results indicated that organic matter could be used as a carbon source to eliminate the produced NO3--N in SABRs. Therefore, the newly developed bioreactor provides an effective approach for treating N-polluted urban surface waters.