Azo compounds, extensively utilized across various industries, contribute to the release of toxic effluents that are detrimental to both the environment and human health. Traditional methods for azo dye removal often result in harmful byproducts or concentrated sludge, complicating disposal efforts. This study explores the potential of two yeast strains, Candida tropicalis and Pichia kudriavzevii, to effectively decolorize azo dyes (TD4, TD5, and TD6) while simultaneously accumulating lipids. The cultures achieved 80–90 % decolorization of the selected dyes during incubation, with Pichia showing higher efficiency across multiple dyes compared to Candida. Lipid profiling identified valuable fatty acids, such as palmitic acid and oleic acid, with potential applications in biofuels and other industries. Total Organic Carbon (TOC) analysis revealed a reduction in TOC, indicating degradation and mineralization of the dyes by the yeasts. Metabolic profiling via LC-MS confirmed the degradation, showing the presence of intermediates such as azoles, azolines, isoquinolines, pyridines, and benzopyrans in dye-supplemented cultures. Additionally, pathways related to energy metabolism, amino acid metabolism, drug metabolism (cytochrome P450), degradation of aromatic compounds, and steroid biosynthesis were enriched in the dye-treated cultures. Lipid output in the presence of dyes ranged from 40 % to 90 %. The study thus demonstrates a proof of concept for economically viable lipid production combined with efficient dye removal, presenting a sustainable solution to environmental and industrial challenges.