Mutualism between microalgae and bacteria is ubiquitous, but remains underexplored as a basis for biodegradation of anthropogenic pollutants. In industrial systems, poor iron uptake by microalgae limits growth, bioprocessing efficacy, and bioremediation potential. Iron supplementation is costly and ineffective because iron remains insoluble in aqueous medium and biologically unavailable. In aquatic environments, microalgae develop an association with bacteria that solubilize iron by production of siderophore, which increases the bioavailability of iron as a public good. Algae, in exchange, provides dissolved organic matter to bacteria to sustain such interkingdom associations. Therefore, using a case study of azo dye degradation, we combine environmental isolations and synthetic ecology as a workflow, establishing a microbial community to degrade industrially relevant Acid Black 1 dye. We create a mutualism between previously non-associated chlorophyte alga Chlorella sorokiniana and siderophore-producing bacterium Ralstonia pickettii, based on the eco-evolutionary principle of exchange of iron and carbon. This siderophore-mediated increased iron bioavailability increases reductive iron uptake, growth rate, and azoreductase-mediated dye degradation of microalga. In exchange, C. sorokiniana produces galactose, glucose, and mannose as major extracellular monosaccharides, supporting bacterial growth. We propose a mechanism whereby extracellular ferrireductase is crucial for azoreductase-mediated dye degradation in microalgae. Our work demonstrates that bioavailability of iron, which is often overlooked in industrial bio-designs, governs microalgal growth and enzymatic processes. Our results suggest that algal-bacterial consortia based on the active association are a self-sustainable mechanism to overcome existing challenges of micronutrient availability in bioremediation systems and their industrial translation.