Effluents such as from the textile industry containing recalcitrant compounds cannot be treated with conventional biological methods. It is known that 90% of reactive dyes entering activated sludge sewage treatment plants will pass through unchanged and be discharged to rivers. In the EU-RTD project BIOEFFTEX, enzymes (phenol-oxidases, laccases, catalases, azo-reductases) for the degradation of bleaching chemicals and dyes are isolated from both fungi and bacteria. The physiology of production and the substrate specificities of the isolated enzymes are studied in detail. Various dye model compounds have been synthesized to study the influence of substituents on degradation rates. Various fungal laccases have bee isolated while an azo-reductase was purified from an alkalithermophilic Bacillus. sp. Immobilized enzymes are used to allow continuous treatment of effluents recycling the enzymes. In co-operation with the industry, the potential of reuse of the water within the respective production processes is assessed.