Paecilomyces sp. and Pseudomonas syringae pv myricae (CSA105) were isolated from sediment core of drainage of the pulp and paper mill industry. Fungi and bacteria were applied for treatment of pulp and paper mill effluent in a two-step and three-step fixed film sequential bioreactor containing sand and gravel at the bottom of the reactor for immobilization of microbial cells. Degradation of chlorinated phenols and formation of their metabolites were determined by high performance liquid chromatography. The microbes exhibited significant reduction in colour (88.5%), lignin (79.5%), chemical oxygen demand (87.2%) and phenol (87.7%) in two-step aerobic sequential bioreactor, and colour (87.7%), lignin (76.5%), chemical oxygen demand (83.9%) and phenol (87.2%) in three-step anaerobic-aerobic sequential bioreactor.