Paper mills are characterized as polluting industries, these use pulping process for paper manufacturing, due to which toxic chemicals released into environment. Therefore, the biological oxygen demand (BOD), chemical oxygen demand (COD) of the emanating stream is high and dissolved oxygen (DO) is low. To resolve this predicament, two dominant bacteria Bacillus subtilis and Micrococcus luteus, and one fungi Phanerochaete crysosporium was isolated from pulp and paper mills effluent (PPME) soils. These microbes were individually and in consortium were inoculated in (PPME) without diluting and no addition of carbon or nitrogen sources. Experiment was conducted under shaking and stationary conditions for nine days. These microbes were found competent of reducing BOD up to 87.2 %, COD up to 94.7% and lignin content up to 97% after 9 d under shaking conditions and brought down pH of raw PPME to neutral and increased DO from 0.8 mg/L to 6.8 mg/L.