The objective of this study was to evaluate the decolourization potential of textile dyes by a relatively newly identified bacteria species, Enterobacter sp. SXCR which was isolated from the petroleum polluted soil samples. The bacterial strain was identified by 16S rRNA gene sequence analysis. The effects of operational conditions like initial dye concentration, pH, and temperature were optimized to develop an economically feasible decolourization process. The isolate was able to decolourize sulphonated azo dye (Congo red) over a wide range (0.1-1 gl(-1)), pH 5-9, and temperature 22-40 degrees C in static condition. Anaerobic condition with minimal salt medium supplemented with 2 gl(-1) glucose, pH 7 and 34 degrees C were considered to be the optimum decolourizing condition. The bacterial isolate SXCR showed a strong ability to decolourize dye (0.2 gl(-1)) within 93 h. The biodegradation was monitored by UV-vis, fourier transform infra-red spectroscopy (FTIR) spectroscopy and high performance liquid chromatography (HPLC). Furthermore, the involvement of azoreductase in the decolourization process was identified in this strain. Cells of Enterobacter cloacae were immobilized by entrapment in calcium-alginate beads. Immobilized bacterial cells were able to reduced azo bonds enzymatically and used as a biocatalyst for decolourization of azo dye Congo red. Michaelis-Menten kinetics was used to describe the correlation between the decolourization rate and the dye concentration.