The textile industry is one of the important sources of environmental pollution, mainly due to the discharge of dye-containing effluents. Because of their complex chemical structure and stability, textile dyes tend to persist and cause ecological and health hazards. The conventional physical and chemical methods of dye removal are usually inefficient, costly and may produce secondary pollutants, hence the need to search for eco-friendly alternatives. Microbial degradation has come up as a promising solution because it uses the metabolic versatility of microorganisms to detoxify and mineralize dyes into less toxic by-products. This chapter focuses on mechanisms of microbial dye degradation, with a focus on the enzymatic and metabolic pathways involving laccases, peroxidases, and azoreductases. The role of different microorganisms (bacteria, fungi, and algae) in the degradation of different classes of dyes and potential acclimatization towards industrial effluents has been covered in this. The optimization of process efficiency was discussed with respect of key factors affecting microbial degradation, namely pH, temperature, and the presence of a co-substrate. In this way, green technology has the potential to mitigate textile dye pollution for cleaner industrial processes and environmental conservation by integration with existing treatment systems.