Dyes are recalcitrant compounds that resist conventional biological treatments. The degradation of three textile dyes (Indigo, RBBR and Sulphur Black), and the dye-containing liquid effluent and solid waste from the Municipal Treatment Station, Americana, São Paulo, Brazil, by the cyanobacteria Anabaena flos-aquae UTCC64, Phormidium autumnale UTEX1580 and Synechococcus sp. PCC7942 was evaluated. The dye degradation efficiency of the cyanobacteria was compared with anaerobic and anaerobic-aerobic systems in terms of discolouration and toxicity evaluations. The discoloration was evaluated by absorption spectroscopy. Toxicity was measured using the organisms Hydra attenuata, the alga Selenastrum capricornutum and lettuce seeds. The three cyanobacteria showed the potential to remediate textile effluent by removing the colour and reducing the toxicity. However, the growth of cyanobacteria on sludge was slow and discoloration was not efficient. The cyanobacteria P. autumnale UTEX1580 was the only strain that completely degraded the indigo dye. An evaluation of the mutagenicity potential was performed by use of the micronucleus assay using Allium sp. No mutagenicity was observed after the treatment. Two metabolites were produced during the degradation, anthranilic acid and isatin, but toxicity did not increase after the treatment. The cyanobacteria showed the ability to degrade the dyes present in a textile effluent; therefore, they can be used in a tertiary treatment of effluents with recalcitrant compounds.