During the anaerobic biodegradation of effluent from a dimethyl terephthalate (DMT) manufacturing plant, reduction in chemical oxygen demand (COD) degradation and biogas formation was observed after the waste-water concentration exceeded 25% of added feed COD. This condition reverted back to normal after 25-30 days when the DMT waste-water concentration in the feed was brought down to a nontoxic level. However, the above effects were observed only after the concentration of DMT waste-water reached more than 75% of added feed COD when biomass support particles (BSP) were augmented to the system. In the BSP system, a biomass concentration of up to 7000 mg/l was retained and the sludge retention time increased to >200 days compared to 2200 mg/l and 8-10 days, respectively, in the system without BSP (control). Formaldehyde in the waste-water was found to be responsible for the observed toxicity. The BSP system was found to resist formaldehyde toxicity of up to 375 mg/l as against 125 mg/l in the control system. Moreover, the BSP system recovered from the toxicity much faster (15 days) than the control (25-30 days). The advantages of the BSP system in anaerobic treatment of DMT waste-water are discussed.