The relative sensitivity of tannery effluent before and after treatment was compared by employing Nostoc muscorum and microtox assay in laboratory. The effect on chlorophyll, protein and biomass content of Nostoc muscorum was studied with the luminescent property inhibition of Photobacterium phosphorium and compared with algal bioassay. The results of microtox assay after 5, 15 and 30 min of exposure were compared with data obtained from algal bioassay. It was observed that the luminescent property of Photobacterium phosphorium in microtox assay as well as the chlorophyll content of Nostoc muscorum in algal assay were the most sensitive parameters in toxicity evaluation of tannery effluent. The microtox assay produced notably comparable EC50 values with that of algal bioassay. The microtox assay of toxicity showed that EC50 (%) in 30 min was 3.19 and 63.49 for untreated and treated tannery effluent, respectively while in algal bioassay the EC50 for chlorophyll was in between 0–2.5% and 100%, respectively, in untreated and treated effluent. More than 60% reduction of toxicity was noted in treated tannery effluent in both test system.