Dairy industry is considered as the largest waste water producing sector of the food industry in many countries. Dairy waste water contains high concentrations of nutrients, organic and inorganic constituent. Therefore discharging untreated/partially treated dairy waste water causes serious environmental problems. Biological treatment methods show the highest efficiency for treating dairy waste water. Aim of the present study was to identify indigenous bacteria capable of degrading dairy waste water efficiently. Bacterial isolates were tested individually and in combinations using synthetic waste water medium, incubated at 30 C, for 2 days and Chemical Oxygen Demand (COD), pH, free fatty acid content, cell growth rate and the lipase activity were obtained at 6 hr time intervals for 36 hours. All the tested bacteria along with the consortium exhibited the lipid degradation as well as removal of organic matter. Pseudomonas aeruginosa showed the highest lipid derivative activity and the highest activity in reducing COD to 250mg2/ltr at 12 hours.