Azo dyes and their intermediate degradation products are common contaminants of soil and groundwater in developing countries where textile and leather dye products are produced. The toxicity of azo dyes is primarily associated with their molecular structure, substitution groups and reactivity. To avoid contamination of natural resources and to minimize risk to human health, this wastewater requires treatment in an environmentally safe manner. This manuscript critically reviews biological treatment systems and the role of bacterial reductive and oxidative enzymes/processes in the bioremediation of dye-polluted wastewaters. Many studies have shown that a variety of culturable bacteria have efficient enzymatic systems that can carry out complete mineralization of dye chemicals and their metabolites (aromatic compounds) over a wide range of environmental conditions. Complete mineralization of azo dyes generally involves a two-step process requiring initial anaerobic treatment for decolorization, followed by an oxidative process that results in degradation of the toxic intermediates that are formed during the first step. Molecular studies have revealed that the first reductive process can be carried out by two classes of enzymes involving flavin-dependent and flavin-free azoreductases under anaerobic or low oxygen conditions. The second step that is carried out by oxidative enzymes that primarily involves broad specificity peroxidases, laccases and tyrosinases. This review focuses, in particular, on the characterization of these enzymes with respect to their enzyme kinetics and the environmental conditions that are necessary for bioreactor systems to treat azo dyes contained in wastewater.