Bacterial cultures isolated from the waste water treatment plant have the capacity to decoluorize and degrade the toxic Azo dyes. The present study was conducted to investigate the decolourization and degradation of Direct azo dyes and biodegradation of textile dye effluent by using bacteria and fungi isolated from textile dye effluent. Five different bacterial species were isolated from the textile dye effluent sample and the isolates were identified as Bacillus subtilis, Pseudomonas aeruginosa, Proteus mirabilis, Klebsiella pneumoniae and Escherichia coli. Seven different fungal species were isolated and identified. The fungal isolates were identified as Aspergillus niger, Aspergillus flavus, Aspergillus fumigatus, Fusarium oxysporum, Penicillium chrysogenum, Mucor sp. and Trichoderma viride. The bacterial and fungal inoculums were inoculated into flasks containing Direct azo dyes (500 mg/l) with trace amounts of yeast extract, glucose and sucrose and then sterilized and incubated for 4 days. The decolourization was expressed in terms of percentage decolourization. Bacterial and fungal biodegradation of textile dye effluent was assessed by analyzing physicochemical properties.