In batch toxicity assays, azo dye compounds were found to be many times more toxic than their cleavage products (aromatic amines) towards methanogenic activity in anaerobic granular sludge. Considering the ability of anaerobic microorganisms to reduce azo groups, detoxication of azo compounds towards methanogens can be expected to occur during anaerobic wastewater treatment. In order to test this hypothesis, the anaerobic degradation of one azo dye compound, Mordant orange 1 (MO1), by granular sludge was investigated in three separate continuous upflow anaerobic sludge-blanket reactors. One reactor, receiving no cosubstrate, failed after 50 days presumably because of a lack of reducing equivalents. However, the two reactors receiving either glucose or a volatile fatty acids (acetate, propionate, butyrate) mixture, could eliminate the dye during operation for 217 days. The azo dye was reductively cleaved to less toxic aromatic amines (1,4-phenylenediamine and 5-aminosalicylic acid) making the treatment of MO1 feasible at influent concentrations that were over 25 times higher than their 50% inhibitory concentrations. In the reactor receiving glucose as cosubstrate, 5-aminosalicylic acid could only be detected at trace levels in the effluent after day 189 of operation. Batch biodegradability assays with the sludge sampled from this reactor confirmed the mineralization of 5-aminosalicylic acid to methane.