A total of seven yeast strains from 18 xylanolytic and/or xylose-fermenting yeast species isolated from the wood-feeding termite Reticulitermes chinenesis could efficiently decolorize various azo dyes under high-salt conditions. Of these strains, a novel and unique azo-degrading and halotolerant yeast, Sterigmatomyces halophilus SSA1575, has been investigated in this study. This strain could significantly decolorize four combinations of a mixture of dyes. It showed a high capability for decolorizing Reactive Black 5 (RB5) even at 1,500 mg L⁻¹. The strain SSA1575 still showed a high capability for decolorizing a 50 mg L⁻¹ RB5 with a salt mixing at a NaCl concentration of up to 80 g L⁻¹. It also exhibited significant ability to decolorize repeated additions of dye aliquots, with a reduction in time of up to 18 h. Most of the tested carbon and nitrogen sources could significantly enhance a RB5 decolorization. However, this process was inhibited by the addition of sucrose and sodium nitrate. NADH-dichlorophenol indophenol (NADH-DCIP) reductase and lignin peroxidase were determined as the key reductase and oxidase of S. halophilus SSA1575. Finally, strain SSA1575, can effectively detoxify RB5 into non-toxic products. Overall, S. halophilus SSA1575, might be a promising halotolerant yeast valued for the treatment of various textile effluents with high salinity.