The pulsed arc discharge to the surface of wastewater was applied to the degradation of a textile azo dye (Acid Red 27). A high-voltage electrode (discharging electrode) was vertically placed above the surface of the wastewater while the wastewater itself was grounded. The pulsed arc discharge occurred between the tip of the discharging electrode and the surface of the wastewater, producing various oxidative species. Oxygen was used as the working gas instead of air to prevent nitrogen oxides from forming. The effect of several parameters on the chromaticity and chemical oxygen demand (COD) removal was examined. The results obtained showed that the chromaticity of the wastewater was completely removed by this process and the COD also decreased significantly. It has been found that ozone formed in the gas phase mainly affects the removal of the dye. The contribution of other effects such as ultraviolet light emission and OH radical formation during the arc discharge to the degradation of the dye was found to be less than 15%. For the present reactor system, the optimum pH, pulse repetition rate and agitation speed were found to be 3.0, 110 Hz and 300 rpm, respectively.