Amongst sludge reduction strategies, the anaerobic side-stream sludge holding tank (SHT) is of particular interest because it has shown significant sludge reduction efficiency. However, due to the anaerobic and starving environment of the SHT, the release of extracellular polymeric substance (EPS) may be stimulated, and it may hamper the application of the SHT to the membrane bioreactor. In order to investigate the effect of sludge storage on EPS release, sludge samples from a pilot-scale sequencing batch reactor coupled with SHT was incubated in a series of bench-scale SHT reactors for different periods of time (0–24 h). The increase in EPS was not significant until 12 h of incubation (9.3%), while 40.9% of the increase was observed in the sample incubated for 24 h. The rapid increase in EPS concentration after 12 h indicates a greater rate of cell lysis than that with EPS consumption as substrate. Since inducing the initial stage of the endogenous phase within microorganisms is a key factor for the successful operation of the SHT for sludge reduction, the retention time for the SHT should be shorter than the time for the sudden increase in EPS release.