A systematic investigation was carried out for demonstrating the simple and cost-effective removal of toxic dyes using activated sludge from municipal wastewater. The sorption process was found to follow Freundlich isotherm and pseudo-second-order rate kinetics. Difference in sorption efficiency for activated and deactivated sludge in aerobic and anaerobic conditions revealed the involvement of different microorganism in sorption process with the indication of biodegradation. The sorption process was found to be spontaneous but entropy driven for Remazol Brilliant Blue R and Eriochrome Black T while enthalpy driven for Congo Red. The process was established to be a combination of adsorption as well as biodegradation.