Effluents containing dyes from different industrial sectors pose a serious threat to the environment. Different physicochemical strategies are being carried out in industry to reduce the toxicity of dye-containing waste so that dye-mixed wastewater can be further utilized in agriculture or irrigation purposes in water-scarce areas. But those techniques are economically not feasible. There is an alternative mechanism present in biological systems that are biocatalysts which is eco-friendly, low cost, and sustainable. Lignin peroxidase, Laccase, Manganese peroxidase are oxidoreductase classes of enzymes with the ligninolytic ability and are potential biocatalysts for the degradation of environmental toxicants like dyes. Besides ligninolytic enzymes, cellulase, pectinase are also powerful candidates for dye decolourization. Most interestingly these biocatalysts are found in a variety of microbial monoculture as well as in mixed microbial consortia. The consortia are able to reduce the organic load of dye-containing industrial effluent at a higher rate rather than the monoculture. This article critically reviews the efficacy of lignocellulolytic enzymes in dye decolourization by both monoculture and consortia approaches. In addition, this review discusses the genetically and metabolically engineered microbial systems that contribute to dye decolourization as well as put forward some future approaches for the enhancement of dye removal efficacy.