A S A RESULT of its wide usage in the textile and other industries, dyes are widely detected in industrial wastewater. Algae and cyanobacteria can degrade and mineralize a number of dyes, presuming that the reduction appears to be related to the molecular structure of the dyes and the algal species used. The present study was conducted to investigate the potential of the green alga Chlorella vulgaris and the Cyanobacterium Aphanocapsa elachista isolated from polluted industrial regions for biodegradation of some pollutant dyes. The dyes used in this investigation were Disp orange 2RL, Reactive yellow 3RN, Reactive Black NN and Tracid Red BS. The results revealed that the maximum decolorization was observed in Disp. Orange 2RL (Azo dye) by Chlorella vulgaris (55.22%) after 7 days of incubation, while, Aphanocapsa elachista decolorized reactive yellow 3 RN (Azo dye) by 49.16%. Azo reductase enzyme in the used alga is responsible for degradation of azo dyes into an aromatic amine by cleaving the azo linkage. The results showed that treatment of Chlorella vulgaris with Disp Orange 2RL induced the azoreductase enzyme by 62.17% and Aphanocapsa elachista with Reactive yellow 3RN by 52.48% after 7 days of incubation. After decolorization, the degradation products were identified and confirmed by spectroscopic analysis (FTIR, GC/MS). This work concludes the ability of some microalgae and cyanobacteria for biodegradation of environmental pollutants.