The present investigation was undertaken to degrade malathion from sugarcane contaminated agricultural soil using bacterial and fungal strains. Four bacterial and three fungal isolates were obtained by enrichment technique. Minimum inhibitory concentration was determined for these isolates; out of the four bacterial isolates, Achromobacter xylosoxidans JAS11 recorded the highest tolerance of 2,500 mg l−1 and degraded 1,000 mg l−1 of malathion, over a period of 5 days of incubation. Out of three fungal isolates, Aspergillus sp. showed tolerance limit of 800 mg l−1 of malathion and degraded 300 mg l−1 within 24 h of incubation. Apart from pesticide degradation, strain JAS11 was able to solubilize phosphates and make them readily available for plants and also had the ability to produce IAA. © 2014, NAAS (National Academy of Agricultural Sciences).