Dye wastes discharged into water bodies without proper treatment from various industries pose significant environmental hazards due to their carcinogenic, mutagenic, and highly toxic nature. Traditional dye wastewater treatment methods often achieve limited degradation efficiencies, typically between 40 and 60%. In response, various advanced oxidation processes (AOPs) have emerged, offering improved degradation rates of 80 to 90%. However, AOPs are associated with high-energy consumption, maintenance costs, and sludge disposal challenges, which have led to increased interest in oxidase enzymes as alternatives, offering similar dye degradation capabilities with zero disposal costs, eco-friendly production, and reduced energy consumption. Among the oxidase enzymes, laccase, derived from bacteria, fungi, plants, and insects, has demonstrated up to 90% dye degradation efficiency, with and without a mediator system. Laccase-treated samples showed a 65% reduction in toxicity (p < 0.05) and a 70% improvement in water quality metrics compared to untreated wastewater. This review comprehensively examines the enzymatic decolorization of various azo dyes using laccase, highlighting its potential for industrial pollution abatement by exploring the mechanisms, efficiency, and practical applications of laccase in treating dye wastewater, aiming to provide a thorough understanding of its role in mitigating environmental pollution from industrial sources.