The biological treatment efficiency of dye wastewater using activated sludge (AS) is largely limited to the chromaticity and ecotoxicity of dyestuff. To alleviate this limitation, eleven industrial-grade disperse dyes were obtained from a fiber-dyeing factory, and for the first time, we studied the decolorization and detoxification effects of using the Pycnoporus laccase enzyme. Efficient decolorization was achieved with the following conditions: dye concentration 50 mg/L, 1-hydroxybenzotriazole (HBT) 0.15 mM, temperature 65 °C, pH 4, and laccase 0.33 U/mL. The decolorization rate of disperse dyes, ranging from 51 to 96% in this investigation, was highly dependent on the dye type, concentration, laccase loading, and HBT. The ecotoxicity of dyes was evaluated by studying the germination/growth of wheat seed as well as the respiratory rate of aerobic AS. Laccase treatment mitigated the phytotoxicity of dyes because of the higher wheat germination (e.g., increase of 38% for Black ECT 200%) and growth rate (e.g., increase of 91% for Blue 2BLN 200%). The reduced ecotoxicity of decolorized dye solution towards microorganisms was also confirmed by the finding that the oxygen uptake by aerobic AS was increased relative to that of the untreated samples (e.g., increase of 14 folds for Blue HGL 200%). In addition, the chemical oxygen demand (COD) of decolorized dye solution was slightly lower than that without decolorization during the respiratory test. The experimental results suggest that enzymatic decolorization and detoxification can be potentially used as a pretreatment method for disperse dye wastewater followed by AS treatment.