In this study, the commercially used model azo dye Acid Orange-7 (AO-7) was fully degraded into less toxic intermediates using an integrated microbial fuel cell (MFC) and aerobic bioreactor system. The integrated bioreactor system was operated at ambient temperature and continuous-flow mode. AO-7 loading rate was varied during experiments from 70 g m−3 day−1 to 210 g m−3 day−1. Colour and soluble COD removal rates reached >90% under all AO-7 loading rates. The MFC treatment stage prompted AO-7 to undergo reductive degradation into its constituent aromatic amines. HPLC–MS analysis of metabolite extracts from the aerobic stage of the bioreactor system indicated further oxidative degradation of the resulting aromatic amines into simpler compounds. Bioluminescence based Vibrio fischeri ecotoxicity testing demonstrated that aerobic stage effluent exhibited toxicity reductions of approximately fivefold and ten-fold respectively compared to the dye wastewater influent and MFC-stage effluent.