Increased production of food waste (FW) raises serious environmental and social concerns. Yet, high organic content of FW makes it a potential source of energy. While the anaerobic digestion (AD) process is an attractive means of treating FW, particularly in terms of the energy recovered as methane, the process balance mechanism is not entirely known, which limits it use. This study therefore aims to fill this knowledge gap by primarily conducting a FW characterization, batch tests, long-term operation, and mechanism studies of the efficient recovery of methane from FW. Based on a one-year survey, the typical components of the household FW of Macau were identified, characterized by an abundance of proteins and a deficiency of carbohydrates (meat, 32 ± 8%; vegetables, 31 ± 8%; fruits, 18 ± 6%; and starchy foods, 19 ± 12%), resulting in low C/N ratios (6–11). To alleviate the nutrient imbalance of the low C/N ratios on the AD process, different inoculum to substrate ratios (ISRs of 10/3, 2/1, 1/1, and 1/2) were assessed by conducting biochemical methane potential tests. It was found that increasing the ISR from 1/2 to 10/3 promoted the methane production via the enhancement in acetoclastic methanogenesis and hydrolysis of carbohydrates and proteins. Subsequently, a long-term validation of the low-C/N-FW digestion was carried out with an emphasis on microbial assembly, syntrophic interspecies interactions, and niche differentiation of microbial consortia. Diverse microbial consortia demonstrated dynamic physiological balance in terms of methane production in response to alkalinity (ALK), free ammonia nitrogen (FAN), and volatile fatty acid (VFA) variations. Based on the physiological balance analyses, a microbial niche differentiation-based regulation strategy, for low-C/N-FW digestion, was proposed viz. FAN, 0 and 25 mg/L; VFAs, 510–2100 mg/L; and ALK, 3300–7800 mg/L, to achieve a methane output between 150–250 mL/g VS. Complementary metabolism was found to be key to the AD physiological balance, given that it combines multi- digestion pathways with relatively complete gene sets, thereby aiding the physiological balance of digestion. The current study provides new insights into digestion of low-C/N-ratio FW and validates AD process balance regulation strategy based on microbial niche differentiation.