Enzymatic decolourization of the azo dye, Direct Yellow (DY106) by Cucurbita pepo (courgette) peroxidase (CP) is a complex process, which is greatly affected by pH, temperature, enzyme activity and the concentrations of H2O2 and dye. Courgette peroxidase was extracted and its performance was evaluated by using the free-CP (FCP) and immobilized-CP (ICP) forms in the decolourization of DY106. Immobilization of peroxidase in calcium alginate beads was performed according to a strategy aiming to minimize enzyme leakage and keep its activity at a maximum value by optimizing sodium alginate content, enzyme loading and calcium chloride concentration. The initial conditions at which the highest DY106 decolourization yield was obtained were found at pH 2, temperature 20 degrees C, H2O2 dose 1 mmol/L (FCP) and 100 mmol/L (ICP). The highest decolourization rates were obtained for dye concentrations 50 mg/L (FCP) and 80 mg/L (ICP). Under optimal conditions, the FCP was able to decolorize more than 87% of the dye within 2 min. While with ICP, the decolourization yield was 75% within 15 min. The decolourization and removal of DY106 was proved by UV-Vis analysis. Fourier transform infrared (FT-IR) spectroscopy analysis was also performed on DY106 and enzymatic treatment precipitated byproduct.