Water pollution due to textile dyes is a serious threat to every life form. Bacteria can degrade and detoxify toxic dyes present in textile effluents and wastewater. The present study aimed to evaluate the degradation potential of eleven bacterial strains for azo dye methyl red. The optimum degradation efficiency was obtained using P. aeruginosa. It was found from initial screening results that P. aeruginosa is the most potent strain with 81.49% degradation activity and hence it was subsequently used in other degradation experiments. To optimize the degradation conditions, a number of experiments were conducted where only one variable was varied at a time and where maximum degradation was observed at 20 ppm dye concentration, 1666.67 mg/L glucose concentration, 666.66 mg/L sodium chloride concentration, pH 9, temperature 40 °C, 1000 mg/L urea concentration, 3 days incubation period, and 66.66 mg/L hydroquinone (redox mediator). The interactive effect of pH, incubation time, temperature, and dye concentration in a second-order quadratic optimization of process conditions was found to further enhance the biodegradation efficiency of P. aeruginosa by 88.37%. The metabolites of the aliquot mixture of the optimized conditions were analyzed using Fourier transform infrared (FTIR), GC-MS, proton, and carbon 13 Nuclear Magnetic Resonance (NMR) spectroscopic techniques. FTIR results confirmed the reduction of the azo bond of methyl red. The Gas Chromatography–Mass Spectrometry (GC-MS) results revealed that the degraded dye contains benzoic acid and o-xylene as the predominant constituents. Even benzoic acid was isolated from the silica gel column and identified by 1H and 13C NMR spectroscopy. These results indicated that P. aeruginosa can be utilized as an efficient strain for the detoxification and remediation of industrial wastewater containing methyl red and other azo dyes.