Acid yellow 17 (AY17), a very important commercial azo dye used in the textile industry, was degraded by Pseudomonas putida mt-2 at a concentration of up to 200 mg/L. High-performance liquid chromatography analysis of the biodegradation media revealed the presence of 4-aminobenzensulfonic acid (4-ABS) derived from AY17 azoreduction, which attests the expression of an azoreductase by this bacterium. This amine was identified only in the medium of static incubation, which is consistent with its biotransformation under shaken incubation (i.e., aerobic conditions). The mutagenicity of AY17 and its biodegradation products was evaluated by using Salmonella typhimurium TA102 and TA104. No mutagenicity was observed in the presence or absence of a metabolic activation system (S9). In addition, the ability of tested compounds to induce DNA damage in vitro with the DNA strand scission assay was evaluated. Results showed that only static decolorization culture of AY17 showed a significant ability to induce the pKS plasmid DNA opening. The present study showed that P. putida mt-2, cultivated under aerobic conditions, was able to decolorize, and especially to detoxify, AY17.