Biodegradation is a cost-effective method to remove the residues of azo dyes prior to their discharge in wastewater streams from dye product industries. The efficacy of this treatment method is highly dependent on establishing an effective degrader community and maintaining environmental conditions that support the growth and activity of the degrader organisms. Although activated sludge is commonly used as a source of degrader organisms to start the process, bioaugmentation of the wastewater with highly effective strains provides a much more reliable process in which the process manager can use bacterial strains that target particular dye chemicals and metabolites to achieve complete mineralization. The most effective inoculants are able to degrade dyes over a broad concentration range, tolerate a range of environmental conditions of temperature, pH, and salinity, and persist at high population densities in competition with other microorganisms in mixed microbial cultures. The use of growth supplements such as yeast extract can further enhance the biodegradation activity. The ability to achieve complete mineralization of azo dyes depends on the control of the process in which initial decolorization takes place under microaerophilic conditions with low oxygen, followed by elimination of the dye metabolites using an aeration step. In many cases, this may be best achieved by using a mixture of bacterial strains that sequentially carry out the two-step process. Practical development of bacteria for bioaugmentation requires careful screening that is based not only on their efficacy in pure culture, but also on their ability to compete with the indigenous microbial communities in wastewater streams and ability to be produced and delivered as a stable inoculum. In the future, it may be useful to consider bioaugmentation with bacteria that contain mobile genetic elements that carry catabolic pathways, thereby allowing the genes to be introduced into the indigenous microorganisms. The ability to monitor introduced bacteria or catabolic genes will continue to be important for process optimization both in the laboratory and during operation in full-scale treatment systems.