Three lignin-degrading bacterial strains, identified as Paenibacillus sp., Aneurinibacillus aneurinilyticus and Bacillus sp. have been examined for the treatment of pulp and paper mill effluent. The results of this study revealed that all three bacterial strains effectively reduced colour (39-61%), lignin (28-53%), biochemical oxygen demand (BOD) (65-82%), chemical oxygen demand (COD) (52-78%) and total phenol (64-77%) within six days of incubation. However, the highest reduction in colour (61%), lignin (53%), BOD (82%) and COD (78%) was recorded by Bacillus sp. while, maximum reduction in total phenol (77%) was recorded with Paenibacillus sp. treatment. Significant reduction in colour and lignin content by these bacterial strains was observed after two days of incubation, indicating that bacterium initially utilized growth supportive substrates and subsequently chromophoric compounds thereby reducing lignin content and colour in the effluent. The total ion chromatograph (TIC) of compounds present in the ethyl acetate extract of control and bacterial treated samples revealed the formation of several lignin-related aromatic compounds. The compounds identified in extracts of treated samples by Paenibacillus sp were t-cinnamic acid and ferulic acid, while 3-hydroxy-4-methoxyphenol, vanillic acid and vanillin acid by A. aneurinilyticus and gallic acid and ferulic acid by Bacillus sp. respectively indicating the degradation of lignin present in the effluent. The identified compounds obtained after different bacterial treatments were found to be strain-specific. Among these identified compounds, ferulic acid, vanillic acid and vanillin could have immense value for their use in preservatives and in the food flavour industry. (c) 2007 Society of Chemical Industry.