Additional granular activated carbon (GAC) layers on the membrane module within a whole cell fungal membrane bioreactor (MBR) set up to treat dye wastewater was effective in minimizing enzymewashout and in improvement of decoloration (degradation of the dye). Supporting batch tests and continuous monitoring of the quality of bioreactor-supernatant and membrane-penneate revealed that biodegradation was effected by both the suspended culture and the dynamically immobilized enzyme on the GAC-coated membrane. In a control MBR. the efficiency of dye removal was variable; in contrast. 85% to near complete removal of dye was achieved using the MBRs equipped with a membrane with additional GAC layers. A combined critical effect on dye removal efficiency of hydraulic retention time (HRT), instantaneous membrane flux and the amount of GAC coating was observed. Plausible explanations are presented for novel observations such as the achievement of better removal efficiency in the case of the longer HRT, even though the dye loading under different HRTs was kept the same by varying its concentration in the synthetic wastewater. The effect of membrane fouling on removal efficiency is highlighted and approaches to achieve stable long-tenn perfonnance are discussed.