Retting of jute is essentially microbiological and biochemical in nature. Community Level Physiological Profiles (CLPP) as well as genomic diversity of bacterial communities were assessed in water samples collected during pre-retting, after 1st and 2nd charges of retting. The water samples were collected from two widely cultivated jute growing locations, Sonatikari (22 degrees 41'27"N; 88 degrees 35'44"E) and Baduria (22 degrees 44'24"N; 88 degrees 47'24"E), West Bengal, India. The CLPP, expressed as net area under substrate utilization curve, was studied by carbon source utilization patterns in BIOLOG Ecoplates. Molecular diversity was studied by polymerase chain reaction followed by denaturing gradient gel electrophoresis (PCR-DGGE) of total DNA from water samples. Both between locations and stages of retting, substrate utilizations pattern were carbohydrates > carboxylic acids > polymers > amino acids > amines/amides > phenolic compounds. Differential substrate utilization pattern as well as variation in banding pattern in DGGE profiles was observed between the two locations and at different stages of retting. The variations in CLPP in different stages of retting were due to the change in bacterial communities.