The long-term performance of a submerged membrane fungi reactor was observed while a synthetic textile wastewater containing either or both of the two structurally different azo dyes was continuously fed. Compared to the Acid Orange II dye (simpler structure), higher biosorption but slower biodegradation of the polymeric dye (Poly S119) was observed in sterile batch tests. In the membrane bioreactor (MBR), although a relative abundance of fungi (66%) without any specific control of bacterial contamination could be maintained, unlike in pure fungus culture, enzymatic activity was below detection limit. Nevertheless, >99% removal of Poly S119 was consistently achieved under a dye loading of 0.1 g L−1 d−1 (HRT = 1 d). Comparison of the reactor-supernatant (SQ) and the membrane-permeate (PQ) qualities (31% improvement) revealed the significant contribution of the membrane to the overall removal (biosorption, cake layer filtration, biodegradation) of Poly S119. Contrary to the faster removal of Orange II in batch test, membrane-permeate quality revealed 93% removal of the dye in MBR (corresponding SQ = 82%). However, excellent (>99%) stable removal of Orange II or of both the dyes together, as well as stable enzymatic activity was observed following addition of powdered activated carbon (PAC) in the MBR. In accordance with real textile wastewater, dye contributed only 5% of the TOC loading (0.944 g L−1 d−1) in this study. In contrast to low TOC removal by fungi alone, the MBR containing mixed microbial community steadily achieved >98% removal, which improved further to >99% after PAC addition.