Batch sludge digestion studies were conducted under aerobic and anaerobic conditions to study: (i) the role of vinyl sulfone and hydroxyl functional groups in the removal of Reactive Black 5 dye; and (ii) the effect of biomass concentration on the removal of Navy 106 (mixture of three azo dyes) from a textile mill wash water. Removals of color and organic content under aerobic and anaerobic conditions were compared. The potential of the dyes to leach from sludge in landfills was also investigated using the toxicity characteristic leaching procedure (TCLP). The vinyl sulfone group of the Reactive Black 5 dye enabled the dye to be removed better than the hydrolyzed form of the dye under aerobic conditions. Sorption and aerobic color degradation of Navy 106 wash water increased with increased biomass concentration in the reactors. An inhibition to color removal from dye wash water under aerobic conditions was detected at high color-to-biomass ratios. The inhibition was accompanied by a lower rate of nitrate and sulfate release. The total organic carbon (TOC) and chemical oxygen demand (COD) of hydrolyzed Reactive Black 5 dye and Navy 106 wash water decreased under aerobic conditions. Under anaerobic conditions, the color degraded within a day, but the TOC and COD of the pure dye and wash water did not decrease. TCLP extracts contained little, if any, of the dye added to the suspended growth reactors.