Abstract: This paper systematically studied the decolorization of azo-dye by algae. It was observed that algae can decolorize most azo-dyes to some extent, and the decolorization is dependent on several factors such as the structure of dye and species of algae. It was shown that the azo reductase of algae can act on the nitrogen-nitrogen double bond of azo-dye, and degrade it into aromatic amine. The breakdown products of aromatic amine can be further utilized by algae. The results suggested that it is necessary to re-estimate the role of algae in the elimination of organic matters in the lagoon, The algae can not only provide oxygen, but also directly participate in the degradation of organic matters.