This paper summarizes the methodology utilized for measuring the toxic and inhibitory effects of azo-reactive dyes on the activity of activated sludge. The microbial sensor employed in this study consisted of a small-fluidized bed reactor in which the microbial mass was immobilized on spherical (diameter =1–2 mm) reticulated sinter glass carriers. To sustain a highly dense population of aerobic microbes, pure oxygen was supplied via a cylindrical chamber, which comprised part of the sample re-circulation system. The mean hydraulic retention time in the microbial sensor ranged between 30 and 40 min, while temperature was maintained at 30°C and pH at 6.4. Inhibition of microbial activity (toxicity) was determined as the mean percent reduction in carbon dioxide production from microorganisms' respiration. Several azo-reactive dyes demonstrated toxicity when applied at a high concentration (2 g/l), however, a portion of the microbes showed tolerance to the dyes. Moreover, textile wastewater demonstrated very efficient biodegradation.