Bioremediation of azo dye wastewater has been recognized as the most promising approach. However, azo dye biodecolorization is usually performed using free bacterial cells under anaerobic conditions, which has issues in practical application like solid–liquid separation, sensitivity to toxic dyes, and reusability. In this work, we adopt cell immobilization strategy to solve these problems and investigate the biodecolorization of cationic red X-GRL (X-GRL), a typical azo dye, by immobilized cells of Shewanella oneidensis MR-1 (MR-1). Results indicated that under aerobic conditions, immobilized cells of MR-1 could effectively decolorize 100 mg/L X-GRL, while its free cells could hardly do it under the same conditions. X-GRL biodecolorization by immobilized MR-1 was affected by initial dye concentration, number and size of immobilized beads, static or shaking culture, medium pH, and incubation temperature, but above 83% of X-GRL could be decolorized within 48 h in a pH range of 6.0–7.5 and a temperature range of 20–35 °C. The optimal conditions for X-GRL biodecolorization by immobilized MR-1 were as follows: 15 beads of 4.5 mm in diameter, pH 7.0, 30 °C, shaking, and aerobic culture, under which immobilized MR-1 could almost decolorize all of X-GRL (100 mg/L) in 48 h, but an economical decolorization time period was 12 h due to 87.3% X-GRL decolorization efficiency achieved. Additionally, the results of repeated-batch biodecolorization experiments revealed that the immobilized beads were of excellent reusability and long-term X-GRL degradation activity as nearly 80% of initial activity was retained after 5 cycles (240 h). The phytotoxicity assay results indicated that the phytotoxicity of X-GRL was significantly reduced after biodecolorization by immobilized MR-1. This study demonstrates that the biological process using immobilized MR-1 has great potential in the treatment of azo dye wastewater containing X-GRL.