Eight aerobic bacterial strains were isolated from pulp paper mill effluent sludge. Out of eight through nutrient enrichment technique three potential aerobic bacterial strains ITRC S(6), ITRC S(7) and ITRC S(8) were found capable to effectively degrade the kraft lignin (KL), a major byproduct of the chemical pulping process and main contributor to the colour and toxicity of effluent. Further, these potential strains (ITRC S(6), ITRC S(7) and ITRC S(8)) were biochemically characterised as Gram variable small rod, Gram negative rod and Gram positive rod respectively. Subsequently, 16S rRNA sequencing showed 95% base sequence homology and it was identified as Paenibacillus sp. (AY952466), Aneurinibacillus aneurinilyticus (AY856831), Bacillus sp. (AY952465) for ITRC S(6), IITRC S(7) and ITRC S(8), respectively. In batch decolourization experiments Bacillus sp. ITRC S(8) reduced the colour of lignin amended mineral salt medium, pH 7.6 by 65% after 6th d, at 30 degrees C, A. aneurinilyticus ITRC S(7) by 56% and Paenibacillus ITRC S(6) 43%. Under these conditions the three strains degraded the KL by 37%, 33% and 30%, respectively while the mixed culture of these three bacteria reduced colour by 69%, lignin by 40% and total substrate by 50% under same conditions. Biodegradation of the KL was not affected by low (<0.2 mg l(-1)) dissolved oxygen content; thus oxygen inhibition is more likely to be a metabolism-dependent event. Initially with 48 h incubation the decolourization was slow with decreased pH. Further incubation there was rapid decolourization with slight increase in pH at 6d compared with initial pH by increasing culture optical density. The lignin analysis from medium with HPLC indicated complete degradation rather than biotransformation with complete loss of absorbance peak at 280 nm.