Lignin is biologically stabile due to its complex structure, only few microorganisms can degrade it. Biodegradation is caused by the enzymes that initiate its extracellular oxidative depolymerization. These enzymes, responsible for the generation of non-specific free radicals with high reactivity, attack the C-C bonds connecting the structural units of lignin. Lignin-degrading enzymes, lignin peroxidases is a oxidoreductive enzyme, which are useful in the treatment of colored industrial effluents and other xenobiotics as it has bioremediation potential to decolourize the effluents. The present study focused on to isolate and characterizes the lignin degrading bacteria which show the remarkable ability to bleach textile dye effluent. The plant compost soil and cow dung were collected for the isolation of lignin degrading bacteria and tree barks for the preparation of alkali lignin solution. The lignolytic activity of the isolates were studied on LB agar plates containing 0.25% Methylene blue showed zone of lignolysis. The isolates showing lignolytic activity were subjected to lignin peroxidase assay with their crude extracts. The two extracts with highest enzyme activity were used for biobleaching experiment on textile dye effluent. The treated and untreated effluents (control) were characterized by FTIR and the functional groups were determined.The toxicity of the treated and untreated effluents were tested for phytotoxicity with Zea mays seeds and the untreated effluent was found to be toxic to the plants when compared with enzyme treated effluent.