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The present study deals with the decolorisation, biodegradation and detoxification of Direct Black-38, a benzidine based azo dye, by a mixed microbial culture isolated from an aerobic bioreactor treating textile wastewater. The studies revealed a biotransformation of Direct Black-38 into benzidine and 4-aminobiphenyl followed by complete decolorisation and biodegradation of these toxic intermediates. From cytotoxicity studies, it was concluded that detoxification of the dye took place after degradation of the toxic intermediates by the culture.