Concentrated animal feeding operations along with a corresponding absence of suitable manure disposal methods have been shown to cause significant environmental and public health problems, including odors and nutrient enrichment and pathogen contamination of surface and ground waters. Anaerobic digestion (AD) of manure can offer substantial benefits, both economic and intangible, to animal feeding operators and surrounding communities, such as on-site energy generation, production of stable, liquid fertilizer and high quality solid soil amendment, reduction in odors, and reduction in ground and surface water contaminations. The two-phase AD has several advantages over conventional one-phase processes, such as selection and enrichment of different bacteria in each phase, increased stability of the process, and higher organic loading rates (OLR) and shorter hydraulic retention times (HRT). Even though several aspects of two-phase configuration might be very significant for efficient AD of dairy manure, its application has been limited to screened dairy manure only. Therefore, this study investigated possible exploitation of the advantages of two-phase AD for unscreened dairy manure. The results indicated that the use of a two-phase reactor at a SRT/HRT of 10 days (2 days acidogenic and 8 days methanogenic) for AD of dairy manure resulted in 50 and 67% higher biogas production at OLRs of 5 and 6 g VS/L day, respectively, relative to a conventional one-phase configuration with SRT/HRT of 20 days. Furthermore, the phased configuration could tolerate an elevated OLR of 12.6 g VS/L day, which was not achievable with a conventional one-phase configuration.