A white rot fungus Thelephora sp. was used for decolourization of azo dyes such as orange G (50 muM), congo red (50 muM), and amido black 10B (25 muM). Decolourization using the fungus was 33.3%, 97.1% and 98.8% for orange G, congo red and amido black 1013, respectively. An enzymatic dye decolourization study showed that a maximum of 19% orange G was removed by laccase at 15 U/ml whereas lignin peroxidase (LiP) and manganese dependent peroxidase (MnP) at the same concentration decolourized 13.5% and 10.8%, orange G, respectively. A maximum decolourization of 12.0% and 15.0% for congo red and amido black 10B, respectively, was recorded by laccase. A dye industry effluent was treated by the fungus in batch and continuous modes. A maximum decolourization of 61% was achieved on the third day in the batch mode and a maximum decolourization of 50% was obtained by the seventh day in the continuous mode. These results suggest that the batch mode of treatment using Thelephora sp. may be more effective than the continuous mode for colour removal from dye industry effluents.