<p>Azo dyes are the most widely used class of synthetic colorants in textile and related industries; however, their discharge into natural ecosystems poses severe environmental and human-health concerns due to their xenobiotic structure, toxicity, and resistance to degradation. Traditional physicochemical remediation strategies are often costly and may result in incomplete mineralization and secondary pollution. Microbial systems provide an ecologically compatible and economically viable solution through efficient enzymatic reduction and subsequent mineralization of azo dyes and their degradation intermediates. This review synthesizes current advances in microbial bioremediation, with particular emphasis on the enzymatic mechanisms and metabolic processes involved in azo dye degradation, including the roles of key enzymes such as azoreductases, laccases, and peroxidases. The synergistic performance of microbial consortia, optimization of environmental and nutritional parameters, and the integration of bioelectrochemical systems are also discussed. Recent innovations—including genetic engineering, advanced immobilized biocatalysts, nanobiotechnology, high-performance bioreactors, and artificial-intelligence-driven process optimization—are evaluated for their potential to enhance biodegradation efficiency and operational stability. Finally, the major challenges and future perspectives for developing robust microbial systems capable of efficient detoxification and mineralization of azo dyes in industrial wastewater are highlighted. Overall, this review emphasizes the potential of microbial systems and emerging biotechnological strategies as sustainable solutions for azo dye remediation and environmentally responsible wastewater management.</p>