The decolorization studies were performed in orange II dye simulated minimal salt medium and textile effluent by a psychrotrophic Pseudomonas putida SKG-1 isolate. Maximum decolorization of initial 100 mg dye l−1 was achieved at optimum pH 8.0, 30 °C and 4.0% inoculum under static conditions during 96 h incubation. Supplementation with glucose at 0.4% (w/v) and ammonium sulfate (0.1%, w/v)) further enhanced dye decolorization to highest 92.8% within 96 h incubation. The strain was highly tolerant to dye up to 1000 mg l−1. Increasing dye concentration exerted inhibitory effect on bacterial growth and color removal. A direct correlation existed between bacterial growth and dye decolorization. Under above optimized conditions, 35.2% decolorization of unsterilized effluent by native microflora was achieved. The effluent decolorization marginally enhanced (41.3%) upon augmentation with P. putida, and substantially increased (50.2%) when supplemented with glucose and ammonium sulfate without augmentation. Maximum effluent decolorization of 69.5% occurred when supplemented with exogenous carbon and nitrogen source along with P. putida augmentation. Evidently, P. putida has great potential of textile effluent decolorization. GC–MS analysis indicated the formation of sulfanilic acid and 1,2 naphthoquinone as orange II biodegradation metabolites and FTIR analysis revealed the presence of carbonyl and hydroxyl groups. This facultative strain can be employed for sequential anaerobic-aerobic treatment strategy leading to effective dye decolorization anaerobically, and ultimate mineralization of textile dye effluent under aerobic conditions.