As a promising disinfection technique to replace chlorination, ozonation has been demonstrated to be efficient in water treatment. This paper describes an effective way to enhance the ozonation of indigo by using carbon nanotubes functionalized with carboxyl groups (CNTs-COOH) as catalysts. The result of kinetic studies showed that the presence of CNTs-COOH dramatically increased the decolorization rate of indigo. Different types of catalysts were compared to further elucidate the internal mechanism of the catalytic reaction and the special nanostructure and the functional –COOH groups are considered to play an important role in the catalytic ozonation process. Four aromatic intermediate products were identified using an electrospray time-of-flight mass spectrometer and further rationalized by the frontier electron density calculations. Ion chromatography analysis revealed that the nitrogen atom of indigo was released predominantly as ammonium and to a lesser extent as nitrate. The presence of the catalyst CNTs-COOH leads to a higher mineralization degree than single ozonation, as suggested by the total organic carbon (TOC) measurement. Three major carboxylic acids (i.e., oxalic, formic and acetic acids) were also identified as oxidation by-products, and they contributed significantly to the residual TOC after 2 h of ozonation. In addition, the toxicity evolution during the degradation was investigated through two aquatic model species to evaluate the potential ecological risks of the intermediate products.