Due to their large scale use, azo dyes are adversely affecting aquatic fauna and flora as well as humans. The persistent nature of sulphonated azo dyes makes them potential ecotoxic hazards. The aim of the present study was to employ a proficient, locally available biomaterial, viz. periphyton (i.e. epiphyton, epilithon or metaphyton), for removal of the azo dye, methyl orange (MO). Results showed that the periphytic biofilms are capable of completely removing comparatively high concentrations (up to 500 mg L−1) of MO from wastewater. The removal of MO occurs by a synergistic mechanism involving bioadsorption and biodegradation processes. The adsorption of MO by periphyton can be described by pseudo-second order kinetics. Elovich and intraparticle diffusion models as well as Langmuir equations fit well to the MO adsorption process. FTIR analysis of MO and its metabolites demonstrated biotransformation into simpler compounds within 72 h. GC-MS/MS analysis showed the conversion of MO into simpler compounds such as phenol, ethyl acetate and acetyl acetate. The results indicated that periphyton is a promising biomaterial for the complete removal of MO from wastewater and that the treatment process has the potential for in situ removal of MO at contaminated sites.