A Membrane Bioreactor (MBR) – utilising a mixed microbial community dominated by fungi – was explored for treatment of a synthetic textile dye wastewater containing dye, starch (main contributor to Total Organic Carbon, TOC) and other nutrients. Preliminary batch tests confirmed the superior decolouration capacity of a pure fungus culture due to simultaneous biosorption and biodegradation in contrast to mainly biosorption in case of conventional activated sludge. However, activated sludge demonstrated comparatively faster TOC removal. Interestingly, stable removal of both colour (>99%) and TOC (>98%) was achieved in the MBR. The membrane contributed significantly to the overall dye removal (biosorption, cake layer filtration, biodegradation). © 2010 Inderscience Enterprises Ltd.